biotechnology industry organization 2015 special 301 … · 2017-11-16 · biotechnology...
TRANSCRIPT
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By electronic submission
Susan F. Wilson,
Director for Intellectual Property and Innovation
Office of the U.S. Trade Representative
Chair of the Special 301 Committee
Office of the United States Trade Representative
Washington, D.C.
BIOTECHNOLOGY INDUSTRY ORGANIZATION
2015 SPECIAL 301 SUBMISSION
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Table of Contents Executive Summary: ..................................................................................................................... 3
Background ................................................................................................................................... 4
Recent BIO IP Publications ......................................................................................................... 5
PRIORITY WATCH LIST .......................................................................................................... 7
Argentina ..................................................................................................................................... 7
Brazil ............................................................................................................................................ 9
Canada ....................................................................................................................................... 17
Chile ........................................................................................................................................... 23
China .......................................................................................................................................... 24
Ecuador ...................................................................................................................................... 33
India ........................................................................................................................................... 34
Indonesia ................................................................................................................................... 42
South Korea ............................................................................................................................... 43
Thailand ..................................................................................................................................... 45
Turkey ........................................................................................................................................ 47
Venezuela .................................................................................................................................. 48
WATCH LIST ............................................................................................................................. 49
Australia .................................................................................................................................... 49
Colombia ................................................................................................................................... 50
Egypt .......................................................................................................................................... 52
European Union ........................................................................................................................ 52
Mexico ....................................................................................................................................... 54
Paraguay .................................................................................................................................... 56
Peru ........................................................................................................................................... 57
Philippines ................................................................................................................................. 58
Russia ......................................................................................................................................... 59
Vietnam ..................................................................................................................................... 60
Conclusion ................................................................................................................................... 61
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Executive Summary:
The Biotechnology Industry Organization (BIO) appreciates the opportunity to
participate in the Special 301 process and is hopeful that our contribution will assist the United
States Trade Representative’s (USTR) efforts in preserving strong intellectual property
protections for United States’ companies internationally. BIO appreciates the opportunity to
comment on 2015 Special 301 Review: Identification of Countries Under Section 182 of the
Trade Act of 1974: Request for Public Comment and Announcement of Public Hearing.
BIO is a non-profit organization with a membership of more than 1,000 biotechnology
companies, academic institutions, state biotechnology centers, and related organizations in
almost all of the 50 States and a number of foreign countries. BIO’s members research and
develop health care, agricultural, industrial, and environmental biotechnology products. The
U.S. life sciences industry, fueled by the strength of the U.S. patent system, supports more than
7.5 million jobs in the United States, and has generated hundreds of drug products, medical
diagnostic tests, biotech crops, and other environmentally-beneficial products such as renewable
fuels and bio-based plastics.
The vast majority of BIO’s members are small and medium sized enterprises that
currently do not have products on the market. As such BIO’s members rely heavily on the
strength and scope of their intellectual property (IP) to generate investment to take their
technologies to commercialization. More and more, BIO’s members are looking abroad as they
expand their markets and R&D and commercialization efforts.
While IP reforms in foreign countries would greatly improve export of biotech products
from the United States, improvements in IP would benefit foreign countries as well. Studies
show that even developing countries obtain economic benefits from increasing their IP
protection.1 Like in other trade areas, increased standards in IP provide a win-win situation for
the United States and other nations around the world.
To help in assessing the IP challenges abroad that may hinder our companies’ activities,
BIO has surveyed our members asking them to identify relevant IPR barriers in the identified
nation’s law, courts, enforcement regime, regulatory regime, import/export regime, etc. Our
members have provided the information found in this submission and we have compiled the
information in aggregate form. BIO has chosen to aggregate the issues to help identify
1 See Cepeda, Lippoldt, and Senft, Policy Compliments to the Strengthening of IPRS in Developing Countries, 14, September 2010, accessed at http://www.oecdilibrary.org/fr/trade/policy-complements-to-the-strengthening-of-iprs-in-developing-countries_5km7fmwz85d4-en on January 24, 2011 (Working Paper); Minyuan Zhao, Policy Complements to the Strengthening of IPRS in Developing Countries – China’s Intellectual Property Environment: A Firm-Level Perspective, 14 Sep 2010, accessed at http://www.oecd-ilibrary.org/trade/policy-complements-to-the-strengthening-of-iprs-in-developing-countries-china-s-intellectual-propertyenvironment_5km7fmtw4qmv-en;jsessionid=1p4jzo8xww6ep.delta; Lee Branstetter and Kamal Saggi, Intellectual Property Rights, Foreign Direct Investment, and Industrial Development, Oct. 2009, accessed at http://repository.cmu.edu/sds/52/ on January 25, 2011; Lee Branstetter, Raymond Fisman, C. Fritz Foley, and Kamal Saggi, Intellectual Property Rights, Imitation, and Foreign Direct Investment: Theory and Evidence, April 2007, accessed at http://repository.cmu.edu/heinzworks/126/ on January 25, 2011.
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roadblocks affecting U.S. biotechnology companies and to maintain the confidentiality of our
member’s responses.
To this end, BIO has identified the following countries of interest and recommends the
following for our 2013 Special 301 submission.
Priority Watch List: BIO requests USTR to place Argentina, Brazil, Canada, Chile, China,
Ecuador, India, Indonesia, South Korea, Thailand, Turkey, and Venezuela on the Priority Watch
List.
Watch List: BIO requests USTR to place Australia, Colombia, Egypt, the European Union,
Mexico, Paraguay, Peru, Philippines, Russia, and Vietnam on the Watch List.
Section 306 Monitoring: BIO requests USTR to continue monitoring Paraguay under Section
306.
For each of the countries identified in this submission, BIO has identified numerous
issues as important to our members. While the biotechnology industry faces international IPR
challenges that are common across industries, it also faces challenges that are unique to the
biotechnology sector. Those issues common across industry sectors include counterfeiting,
large backlogs and patent office inefficiency, differing administrative, legal, and judicial
standards for patentability, compulsory licensing, inadequate protection of regulatory and
test data, and a need for harmonization of substantive standards and processes across patent
offices around the world. Issues unique to biotechnology include patentability of
biotechnology inventions, double patent review systems, genetic resource access and benefit
regimes, and technology transfer issues that involve intellectual property. This submission will
address these issues as they apply in each country.
BIO hopes this submission informs U.S. Government officials and the public about the
IPR challenges U.S. biotechnology companies face around the world. Finally, we hope our
submission helps the U.S. government identify IPR roadblocks and potential solutions that will
help increase U.S. exports and create jobs in the United States.
Background
Biotechnology companies provide unique benefits to the United States and the world. In
the health care sector alone, the industry has developed and commercialized more than 300
biotechnology drugs and diagnostics and there are over 400 products in the pipeline. In the
agricultural field, biotechnology innovations are simultaneously increasing food supplies,
reducing damage to the environment, conserving natural resources of land, water and nutrients,
and increasing farm income in economies worldwide. In the energy and environmental sector,
biotech innovation is cleaning our environment and fighting global climate change by reducing
our dependence on petroleum and fossil fuels. Biotechnology innovation, if supported by
appropriate public policies, has the potential to provide treatments for some of the world’s most
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intractable diseases and address some of the most pressing agricultural, energy, and
environmental challenges facing our society today.
The biotechnology industry relies heavily on patents. The development of a single
biotechnology product often takes more than a decade to be commercialized, and hundreds of
millions (if not a billion) of dollars of capital investment, a significant amount of which comes
from private sources. Biotechnology product development is also fraught with high risk – the
vast majority of biotech products fail to ever reach the marketplace. In addition, while biotech
health inventions are entitled to the same patent term as all other inventions − 20 years from the
time they are filed – they have the additional hurdle of a rigorous pre-launch regulatory review
process during which they may lose between 8 to 10 years of the patent life. Venture capital
firms invest in capital-intensive, long-term, and high-risk research and development endeavors
only if they believe there will be a return on their investment. Patents help provide this
assurance.2 Without strong and predictable patent protection, investors will shy away from
investing in biotech innovation, and will simply put their money into projects or products that are
less risky – without regard to the great societal value biotechnology can offer.
Recent BIO IP Publications
Taking Stock: How Global Biotechnology Benefits from Intellectual Property Rights
provides a survey of current economic academic literature regarding IP. The key findings
include;
a) A “growing body of evidence suggesting a positive link between economic
development and growth, technology transfer, increased rates of innovation and the
strengthening of IPRs. This is particularly true in knowledge-intensive sectors such as
biopharmaceuticals.
b) “Much of the international debate on biopharmaceutical innovation focuses on
downstream issues: whether IPRs stand in the way of commercialization and whether
they enable or delay access to medicines in developing countries. This discussion is
usually placed in the context of the "North-South" divide (i.e. developed vs. developing
world) and the extent to which the use of IPRs benefits or damages developing
countries.”
c) “The discussion on the use of IPRs in upstream innovation (or the relationship of IPRs
and biotechnology innovation in the context of biotech SMEs and universities) is often
theoretical in nature and only at times based on data and collected evidence. Some
international debates on IPRs relating to the upstream R&D process also examine the
2 According to a patent survey conducted by researchers at the University of California Berkeley, 73% of the biotechnology entrepreneurs surveyed reported that potential funders, such as venture capitalists, angel investors, and commercial banks, etc. indicated patents were an important factor in their investment decisions. See Graham, Stuart J. H. and Sichelman, Ted M., Why Do Start-Ups Patent? (September 6, 2008). Berkeley Technology Law Journal, Vol. 23, 2008. Available at SSRN: http://ssrn.com/abstract=1121224
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issue of ownership of genetic innovations and biologic materials and so-called research
exemptions.”
d) “Recent empirical studies and surveys seem to significantly ease ongoing concerns
about the extent to which the patent system may be used in a manner that slows or
hinders access to biotechnological research and innovation. Still, there is a relative
paucity of direct evidence and data on the roles that IPRs play in stimulating biotech
research and innovation.”
Specifically regarding biotechnology the report finds:
a) “IPRs, especially patents, are actively facilitating and contributing to upstream and
downstream biotechnology activities in both developed and developing countries.”
b) “Today, not only mature economies but also major emerging economies are making
growing use of the patent system to facilitate biotechnology research and
commercialization.”
c) “Accordingly, biotechnology alliances for research and technology transfer have
increased markedly since the early 1990s.”
d) “Case study analysis suggests that strengthening IPRs and introducing technology
transfer frameworks based on IPRs in combination with other reforms can have a positive
and sustained impact on innovation, economic development and growth,
biopharmaceutical R&D and access to biotech products in emerging economies.”3
BIO also commissioned research to review the economic effects of university and
nonprofit licensing of inventions in the United States. For the years 1996-2010 the study finds:
a) Academic licensing contributed up to $836 billion in gross industry output,
b) Contributed up to $388 billion to the GDP,
c) And provided up to 3 million “person years of employment.”4
Finally, BIO participated in two reports reviewing innovative models and approaches for
providing health care in the developing and least developed world. Bringing Innovation to
Neglected Disease Research and Development reviews the barriers to neglected disease research
and product development. 5 The second report, Case Studies for Global Health provides access
to a database of innovative approaches to solve a global health challenge.6
3 The full report is available at http://www.bio.org/articles/taking-stock-how-global-biotechnology-benefits-intellectual-property-rights 4 The full report may be found at http://www.bio.org/articles/economic-contribution-universitynonprofit-inventions-united-states-1996-2010 5 Full report found at http://www.bio.org/articles/bringing-innovation-neglected-disease-research-and-development-joint-report-bio-and-bio-ven 6 http://www.casestudiesforglobalhealth.org/
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PRIORITY WATCH LIST
Argentina
Argentina continues to have deficiencies within its patent and regulatory data protection
regimes. BIO requests that Argentina remain on the Priority Watch List.
On May 8, 2012 the Ministries of Health and Industry and the National Institute of
Industrial Property issued Joint Regulation No 118/2012, 546/2012 and 107/2012 setting
Guidelines for Patentability Examination of Patent Applications on Chemical and
Pharmaceutical Inventions. The Guidelines apply exclusively to the pharmaceutical area and
apply to all future and pending applications. The new Guidelines reject patents with claims for
compositions, dosages, salts, esters and ethers, polymorphs, analogous procedures, active
metabolites and pro-drugs, enantiomers, selection patents and Markush-type claims. In addition,
processes for the manufacture of active compounds disclosed in a specification must be
reproducible and applicable on an industrial scale to be patentable. The Guidelines refer to
biotechnological inventions (biologics) and requires that they be analyzed using these principles.
The Guidelines represent a clear violation of TRIPS Article 27.1 which requires “patent rights to
be enjoyable without discrimination as to the place of invention, the field of technology and
whether products are imported or locally produced.”
In 2012, Argentina also had a judicial interpretation stating that the Argentine Patents Act
does not protect a patent while it is pending. The Court held that the patent only grants
protection from the date of grant (rather than the date of filing). This results in a term of less
than 20 years.7
Argentina’s patent examination system continues to suffer from a backlog of patent
applications that delays the grant of patent protection for valuable inventions and thereby denies
the adequate and effective protection of intellectual property rights for BIO’s members. We
understand that Argentina has taken steps in recent years to reduce its backlog, but excessive
delays are persistent. Currently, the National Institute of Industrial Property (INPI) performs
substantive examinations according to the chronological order of the filing date of the
corresponding request of examination. Typically in Argentina, substantive examination begins
five to six years after the filing date. Consequently, a patent application requires around eight to
10 years to be granted. Argentina’s patent law neither provides for sufficient patent term
extensions to fully compensate for unwarranted delays by INPI in the examination of patent
applications, nor provides provisional protection rights to applicants of such pending patent
applications. Thus BIO’s members suffer a substantial loss of patent term due to delays in
examination.
7 Novartis AG vs. Laboratorios LKM SA re cease of use of patent, 3rd Chamber of the Federal Civil and Commercial Appellate Court of Argentina. News article summarizing decision at http://www.ip-watch.org/2012/11/14/analysis-argentine-court-clarifies-what-patent-holders-can-and-cannot-prohibit/
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In addition, Argentina has yet to implement the Patent Cooperation Treaty (PCT), which
facilitates the filing and examination of patent applications in more than a hundred member
countries. Implementing this widely accepted agreement would be a positive step toward
reducing unnecessary expenses and facilitating the procurement of patent protection in Argentina
for BIO’s members. Further, the highly restrictive patent examination guidelines issued by the
INPI in Argentina exclude protection for a wide range of biotechnological inventions. The
criteria adopted by INPI, which denies patent claims directed to transgenic plants and animals,
their parts and components, also appear to be inconsistent with the Argentine patent law. The
patent law provides an exception to patentability only for living material and substances that are
“pre-existing in nature.” Transgenic plants and animals, their parts and components are not pre-
existing in nature. BIO’s members also continue to experience difficulties enforcing patent and
plant variety protections in Argentina. Finally, INPI does not grant patents for polymorphs or
salt forms of known pharmaceutical compounds.
Argentina also does not provide adequate protection for the data that must be generated in
support of marketing authorization to prove that biotechnology products applicable to the
pharmaceutical and agricultural chemical industries are safe and effective. Specifically, law
24,766 permits Argentine officials to rely on innovator data to approve generic products.
Generic companies may also rely on marketing approval of an innovative product in other
countries. This protection is critical to the ability of biotechnology companies to develop and
commercialize such biotechnology products in a particular market. Moreover, TRIPS Article
39.3 obligates Argentina to protect such data against “unfair commercial use.” Persistent
deficiencies in the patent and data protection regime in Argentina deny adequate and effective
protection for the intellectual property rights of BIO’s members.
Our companies have expressed concern over the unpatentability of the use of a drug in a
method of treatment. Many other nations permit claims to the “use of compound X in preparation
of a medicament for treating disease Y” or “compound X for use in treating disease Y.” The
Patent Office Patent Bulletin from 2002 (Circular A.N.P. No. 008/02) demonstrates the
restrictiveness of its provision. The provision states that no patent protection will be awarded to
second medical uses as a main object in the following cases:
a) claims directed to the use of a known compound for the treatment of a certain disease,
because they will be considered as included in the prohibition to patent methods of
treatment contained in the Argentine Patent Law.
b) claims worded as Swiss-type claims, since the Patent Office will assume that the
invention does not comply with the novelty requirement.
c) claims directed to the process for the manufacture of a medicament when the novelty
of the process is based on a new use of a known compound, because the Patent Office
will consider that the invention does not comply with the novelty requirement.
These restrictions on patentability fail to recognize possible flexibilities allowed in other
countries that represent a compromise between both government and U.S. business needs.
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A lack of significant progress in the patent regime, data protection, and patent claim
scope areas has convinced BIO to request the USTR to maintain Argentina on the Priority
Watch List.
Brazil
Although Brazil has made some improvements to its protection of intellectual property
over the years, there are still several problematic issues that hinder Brazil from fully achieving a
positive IP agenda across technology sectors, particularly with respect to the biotechnology
sector. Past reforms have reaffirmed the fact that changes in the patent law have encouraged
Brazilian biotech innovation; however, lack of significant progress on new reforms and lack of
coordination at the Congressional and Federal government level present short- and long-term
obstacles to achieving an optimum IP environment in one of Latin America’s most important and
influential economies8. In light of these reasons, BIO recommends that USTR place Brazil on the
Priority Watch List.
Brazilian Patent Office (INPI)
In September 2013, INPI issued a binding opinion “clarifying” that the patent term for
applications filed between January 1, 1995, and May 14, 1997, is limited to 20 years from the
filing date. The opinion distinguishes “mailbox” patents from subsequent patents, which are
guaranteed a patent life of 20 years from filing with a minimum term of 10 years from patent
grant, under Article 40 of Brazil’s patent law. More than 250 of these “mailbox” patents were
filed as part of Brazil’s obligations created by its WTO ascension. Prior to this time, Brazil did
not issue patents for pharmaceutical or agricultural products.
As INPI’s opinion is not self-executing, INPI then filed more than 30 lawsuits against at
least 120 companies and institutions, seeking to alter the patent terms on these patents or have
them declared invalid. This raises significant process and fairness issues as INPI previously
approved these patents and the corresponding patent term and now seeks to change these terms
retroactively. Many of our members in the biopharmaceutical and agricultural sectors are named
defendants in the suits. INPI has requested a preliminary injunction to nullify these patents
pending resolution of the case. Thus far, the courts are split and the majority of 48 lawsuits
initially filed are still pending decisions. These lawsuits based on the lack of consensus between
judges and Federal Courts as well as delays in the judicial system have not helped to improve
and stabilize the local IP environment and has impacted industry’s relationship, to some degree,
with the INPI.
8 For example, this study provides five post-patent law reform bio-medical technology and innovation projects in the state of Sao Paulo that all show how patents incentivized Brazilian entrepreneurs to bring Brazilian biotech innovation to the market. See Ryan, Michael P., Patent Incentives, Technology Markets, and Public-Private Bio-Medical Innovation Networks in Brazil, World Development Journal 38 (2010).
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INPI has released proposed rules which would result in new Biotechnology Patent
Examination Guidelines.9 BIO requests the U.S. Government ensures that innovative
biotechnology companies are adequately protected in the new Guidelines. Despite the proposed
rules having been released well over a year ago, there are no developments or official word from
the INPI on when these new rules will be published. This uncertainty and inefficiency presents
additional obstacles to obtaining a positive IP environment.
We understand that the Brazilian Patent Office has plans to hire new patent examiners,
including new biotechnology patent examiners, in order to address the Office’s lack of an
adequately sized staff of properly trained patent examiners. Nonetheless, again inefficiencies in
the hiring process and administrative problems and bureaucratic issues have delayed the hiring of
new examiners in 2014, despite this being the new INPI President’s major priority in 2014.
The INPI President also established that a major goal of 2014 was to reduce the patent
backlog. However, despite a successful green technology fast-track patent campaign which was
limited to only 500 applications, there has been no noticeable improvement in the backlog,
particularly in the biotechnology sector. Companies routinely wait for eight to ten years before
examination occurs, with any potential issuance of a patent occurring several years later. One
biotech company reported that they filed 335 cases over 30 years with only 5 being granted.
Only 2 patents have not expired with about 80 cases being abandoned by the company. Another
company reports filing 200 patent applications with only 2 patents issued in the past dozen years.
While conditions are improving, biotechnology companies are still hesitant to seek market
authorization for their products in Brazil due to this backlog at the Patent Office.
Another problem involves the INPI practice of not allowing amendments or added claims
to patent applications after the examination has been requested. In addition, the INPI has also
been denying divisional applications with different claim scope than that of the parent patent
application for divisional applications filed after examination has been requested. In other words,
INPI prohibits amending claims to include classes or categories of claims not included in the
original claim set. The applicant cannot broaden the claims after the examination request. This
prevents the applicant from adding claims to preferred embodiments that, for example, cover
actual drugs sold in Brazil that were present in the application initially filed.
Some Brazilian lawyers claim that the patent examiners often fail to follow their own
INPI guidance when examining patent applications. Our companies have to navigate difficult
administrative hurdles. One company reported that they had to file multiple appeals to the
President of INPI before allowance. These particular administrative hurdles are not found in
other developed patent systems like Brazil. Some members of BIO also report that examiners
abuse the obviousness standard. Some members state that in their experience, examiners often
rely heavily on hindsight reasoning to make obviousness arguments in biotech cases.
Members also have inadequate access to INPI patent prosecution records. One company
reported receiving notice of rejection of claims in a pending application but not receiving the
substantive action until after the deadline for responding. Electronic access to INPI prosecution
9 For BIO’s Comments see, http://www.bio.org/advocacy/letters/bio-comments-inpi-guidelines-examination-patent-applications
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records is possible; however, the system often presents problems and is not completely reliable
making it necessary to continue to obtain access to patents and file wrappers by physically
visiting the INPI and waiting to receive copies of requested documents.
It is also important to note that there is some political uncertainty with respect to the
future direction and leadership of the Patent Office. In December 2013, a new President of the
Patent Office was named. In addition, in February 2014, a new Minister of the Ministry of
Development, Industry and Trade was named. After a challenging Presidential re-election
campaign and increased political pressure in the capitol Brasilia, the President named in
December 2014 yet a new Minister. The Patent Office falls under this Ministry and due to the
number of transitions over the last year, there is some degree of uncertainty as to the leadership
and direction of the Patent Office in 2015.
Finally, biotechnology companies would greatly benefit from any possibility of Brazil
joining with the U.S. or other countries in harmonization efforts.
Patent Law
Brazil lacks meaningful patent protection for secondary claims covering novel uses. In
fact, two proposed bills seek to exclude second medical uses altogether.10 This deters product
development by innovator companies as it disincentivizes biotech companies from further
developing their products to find new applications or to adjust the products to serve unique and
underserved customers. Lack of secondary claims covering novel uses impedes biotechnology
companies’ progress in Brazil.
Exemptions for patent infringement are excessive in Brazil which unfairly curtails patent
holder’s enforcement rights. Private non-commercial use that does not “result in prejudice to
owner’s economic interests” is exempted. Experimental use related to technological research is
exempted. Use of inventions placed into the domestic market by the patent owner under owner’s
consent is exempted. Use of the subject matter of patents related to living matter as a source to
obtain new products is exempted. Use or distribution of patented biological material that has
been legally introduced into the market by owners, except for commercial propagation is
exempted. Finally, the use of patented medicines by pharmacies for ‘individual cases’ are
exempted. These exemptions go beyond the global norm.
In 2007, Brazil granted a compulsory license for efavirenz. This act raises significant
concerns about whether intellectual property rights can be adequately and effectively protected in
Brazil. Brazilian law also requires a patentee to “make use of” a patent or allow others to do so
within three years of issuance. Failure to comply results in INPI issuing a compulsory license to
a third party with technical and economical capacity and legitimate interest in using the
technology of the patent (in other words, the noninnovative competitor). In addition, according
to Decree N0 4.820 of September 4, 2003, the patent holder may also be obligated to supply
technical know-how to perform the invention or potentially have the patent declared invalid.
While BIO understands the challenges that countries face in providing affordable
healthcare systems, BIO continues to believe that the most effective solutions will result from 10 2.511/07 and 3.995/08
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policies that respect and encourage innovation. The granting of compulsory licenses in this
manner will undermine incentives needed to develop new medicines.
Brazil has a plant variety protection (PVP) law in force, but excludes patent protection
for plants in generic terms (i.e. beyond plant varieties). As consequence, the Brazilian
government has created a significant gap in intellectual property protection for inventions in the
field of agriculture. Innovators of plant-based inventions that are applicable to many plants or to
many plant varieties cannot obtain adequate protection for their inventions either with patents
("plants" broadly excluded) or from PVP (only applicable to plant varieties). Amending Article
18.III of the Brazilian IP Law by limiting the exclusion to "plant varieties" instead of "plants"
(and "animal races" instead of "animals") should positively remove this gap of protection for
agriculture innovations.
In addition, certain innovations in the agriculture sector may qualify as "all or part of
natural living beings and biological materials found in nature ", which are excluded from
protection under Article 10.IX of the Brazilian IP Law. However, such innovations require much
investigations and investments to be identified as useful for agriculture, and removal of such
exclusion would be as much necessary to maintain the investments in the development of such
innovations addressing the challenges of agriculture.
Courts
ABIFINA, a Brazilian association representing national companies with chemical
interests including many generics companies, filed a legal action in the Brazilian courts this
November challenging the constitutionality of Brazil’s guarantee of a minimum patent term of
10 years for all patents. A 10-year minimum has been crucial for biotech innovators to protect
against INPI’s notorious patent review delays. Companies routinely wait 8-10 years before
patent examination even begins. Revoking the 10-year minimum patent term could significantly
shorten patent life for many biotechnology inventions.
On November 6, 2013, the judge assigned to the ABIFINA case, Justice Fux, denied
ABIFINA’s request for a preliminary injunction, which would have immediately suspended the
minimum 10-year term. However, Justice Fux placed the case on accelerated track status. As part
of the proceedings, the National Congress and the President of the Republic have been asked to
provide their opinion of the constitutional challenge. Both have responded rejecting ABIFINA’s
claim of unconstitutionality and support the 10-year patent minimum.
The case is still pending and on November 26, 2014 Justice Fux allowed Interfarma, a
local R&D based pharmaceutical industry organization, and Andef, a local R&D based
agricultural industry organization, to be admitted as amicus curiae.
ANVISA Review of Patentability
Brazilian law dictates that the regulatory authority (ANVISA) must provide prior consent
on the grant of a pharmaceutical patent. Traditionally, ANVISA has interpreted this requirement
as an obligation to review patentability criteria in a patent application. Innovators have always
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maintained that such actions are inconsistent with TRIPS Articles 27 and 62.2, as ANVISA
required applicants to reargue their claims already deemed allowable by INPI.
On January 25, 2010 the Brazilian Attorney General of the Union (AGU) provided a
legal opinion to resolve this issue and determined that ANVISA’s review should be restricted to
an analysis of the sanitary risks of the patented drug to health.11 The Attorney General found that
any other analysis would entail an invasion of INPI’s competence and be contrary to Brazilian
law.
BIO understands that an Inter-Ministerial Working Group formed to resolve this issue.
The Working Group issued a statement reaffirming the involvement of each Agency in the patent
review process and indicating that ANVISA and INPI would propose rules for public comment
on how each agency would proceed. On October 16, 2012, ANVISA issued Public Consultation
No. 66 detailing how they would approach their mandate to provide prior consent for
pharmaceutical patent grants and on April 15, 2013 Resolution 21/2013 was published.
BIO remains concerned about how Resolution 21/2013 defines when ANVISA should
deny prior consent of pharmaceutical patent applications. According to the regulation, prior
consent should be denied when the application is “contrary to public health”. ANVISA defines
“contrary to public health” as:
I “The pharmaceutical product or process contained in the patent presents a health risk
II. The patent application of the pharmaceutical product or process is of interest to the
policies regulating the universal access to medicine and pharmaceutical assistance as provided
for under SUS – Universal Public Health System – and that do not meet the patentability
requirements and other criteria as established in the IP Law 9.279/1996.”
First, according to ANVISA a patent application presents a health risk when any narcotic
or prohibited substance in Brazil is part of the invention.
According to the regulation, ANVISA may assess patentability requirements if the
application refers to a strategic drug of SUS and if ANVISA determines that the application does
not meet the patentability requirements, prior consent will be denied and the patent application
will be forwarded to the INPI where the INPI should publish a notice of rejection.
BIO is concerned as to what ANVISA may refer to when stating that it may assess
patentability requirements of applications that are “of interest to the policies regulating the
universal access to medicine and pharmaceutical assistance as provided for under SUS.”
The Brazilian Health Ministry recently published a new Ordinance 2888/2014 which
creates a new list of strategically important drugs for the SUS. This new list is significantly
smaller than the former list of strategic drugs contained in the recently revoked Ordinance
11 Accessed on February 10, 2011 and found at: http://translate.google.com/translate?sl=auto&tl=en&u=http://www.agu.gov.br/sistemas/site/TemplateImagemTextoThumb.aspx?idConteudo%3D153676%26id_site%3D3
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3089/2013. ANVISA has in practice restricted its prior consent review and patentability
assessment to applications that refer to drugs and drug categories listed in these Ordinances.
Nonetheless, there is still uncertainty as to whether ANVISA will restrict its prior consent
to drugs listed in Ordinance 2888/2014 or will broadly apply prior consent to drugs that were
contained in previous lists of strategic drugs to the SUS. In addition, there is uncertainty whether
ANVISA will restrict its review to those drugs specifically listed in the Ordinance or whether
ANVISA will broaden its review to all drugs that fall under the strategic medical treatment
categories listed in the previous Ordinances.
The rules in place and practices of ANVISA in reviewing patent applications for
patentability requirements raise serious concerns as to whether this conduct goes beyond the
Agency’s competencies and goes against the previous Attorney General’s opinion.
BIO Members from the pharmaceutical industry have also reported delays with respect to
the INPI examination of patent applications that have undergone a substantive patentability
examination by the food and health regulatory agency ANVISA. BIO Members have stated that
there is increasing political tension between the INPI and ANVISA with respect to ANVISA’s
role in reviewing patentability criteria and until the matter is resolved politically or judicially
Members expect the review of patent applications affected by this ‘prior consent’ analysis by
ANVISA to be postponed.
Recently, a local pharmaceutical industry organization representing members engaged in
R&D and developing novel drugs, Interfarma, brought a class action lawsuit against ANVISA on
this matter of prior consent. The action seeks to establish that Resolution 21/2013 cannot be
considered a valid/legal instrument to legitimate ANVISA’s role in examining patentability
requirements in order to determine whether a patent application presents a health issue. ANVISA
has not filed a response to this lawsuit but developments from this lawsuit will significantly
impact the pharmaceutical IP environment in Brazil.
Regulatory Issues
Biotechnology companies find operating in the current regulatory environment difficult;
especially when unauthorized copies of products receive registrations on undisclosed tests and
other confidential data. Brazil’s lack of data protection for biopharmaceuticals is inconsistent
with TRIPS Article 39. Article 39.3 requires that members, requiring approval for
pharmaceutical or agricultural chemical products, “protect data against unfair commercial use.”
While Brazil implemented 10 years of data exclusivity for agrochemical and veterinary products,
it has yet to provide similar protections for biopharmaceutical products. Providing an
appropriate period of data protection, e.g. 5 years of protection for small molecules and 12 years
for biologics reflecting U.S. law with some form of patent linkage would help biotechnology
companies enter and succeed in the Brazilian market. Moreover, this type of protection could be
strengthened by also implementing a patent enforcement mechanism that would permit
innovators to initiate and resolve patent disputes prior to launch of a generic product on the
Brazilian market.
15
Proposed New Regulatory Pathway for “Low-Complexity” Biologics
Besides not providing for any data protection for biopharmaceuticals, there are additional
regulatory questions with respect to a proposed regulatory pathway in Brazil for approving
biosimilars. ANVISA has discussed placing on its 2015 regulatory agenda a new regulation for
registering “low-complexity” biosimilars. This simplified regulatory pathway for “low-
complexity” biologics is problematic in that it may compromise patient safety by allowing for
biosimilars to be approved and commercialized that have not been appropriately tested and
compared to reference biologics in order to assess their quality, efficacy and safety profiles.
Besides the obvious public health concerns that this may raise, this pathway may result in
biologic drugs being approved that may infringe on BIO Member’s IP rights in Brazil and that
are approved based upon, in part, the use of non-disclosed regulatory data that should be
protected by ANVISA.
BIO understands that the current ANVISA regulations on registering biosimilars
established in RDC 55/2010, namely the Comparability Development Pathway and the
Individual Development Pathway, are adequate and sufficiently clear for registering the full
spectrum of biologic drugs, independent of their complexities. The level of “complexity” of a
potential biosimilar or biological product should not provide the sole justification for developing
a distinct regulatory pathway.
Regardless of ANVISA’s assessment of a biologic drug’s “complexity”, biosimilars
require a thorough and directly comparative analytical characterization and quality studies
followed by pre-clinical and clinical development program to show high similarity to the
reference biologic in terms of safety, quality and efficacy. Ideally, biosimilar regulations should
not present IP challenges, particularly with respect to regulatory data protection, and should be
designed in order to ensure that patients are receiving biosimilars of proven safety, quality, and
efficacy in comparison to reference biologic drugs.
Enforcement
Licensing and IP enforcement laws remain difficult to navigate and weighted against the
interests of the IP owner. For example, INPI requires registration of license agreements before
they can be enforced, before royalty revenues can be exported, or before companies can utilize
favorable tax rates. Further, INPI can dictate terms prohibiting parties from freely contracting
and restricting the owner from fully exploiting their IP. For example, INPI can stipulate that
royalty rates not exceed 5% of gross income per unit. In addition, Federal law prohibits royalty
payments to be sent abroad to foreign patent holders when the royalty payments refer to a
pending patent application. In other words, only upon granting of a patent, which may take over
ten years from filing, will a patent holder be able to receive royalty payments. Finally,
confidentiality provisions extending beyond the term of the agreement are limited to five to ten
years. These issues may discourage innovative companies to enter into licensing agreements in
Brazil.
16
Genetic Resources
In 2001, a Provisional Act for the implementation of access and benefit sharing regime in
Brazil was issued. The Provisional Act represents the current law in Brazil but the Act also
requires the legislature and regulatory agencies to better define and create an access and benefit
sharing regime. However, although the regulatory agencies have issued internal norms and
regulations, the legislature has not acted to clarify the Provisional Act for the past 10 years. This
has created significant uncertainty for the protection of inventions that rely on genetic materials.
The Act prohibits access of Brazilian genetic resources without authorization by Brazil's
Council for the Management of Genetic Patrimony (CGEN), a regulatory agency under the
management of the Ministry of Environment. Authorization by CGEN has taken 2 to 3 years
although there are reports that this delay is diminishing somewhat. Under the Act, researchers
may not, in theory, start their research on the genetic resource while they are waiting for
authorization. It is not possible to on obtain a patent without such Authorization.
On April 30, 2009, the INPI implemented the Act by stating that any applicant should
inform the patent office of authorization in the patent application. Failure to provide such an
authorization will lead to an immediate administrative office action requesting a copy of the
authorization which may ultimately result in the patent being cancelled or suspended. The Act
then requires that once authorization and the patent have been granted, the patent owner must
share benefits through the payment of royalties. However, the Act does not delineate, and
regulations have not yet been promulgated to address, whom or what entity should receive these
royalties. In short, the access and benefit regime in Brazil is fragmented and uncertain. The
definition of a Brazilian genetic resource remains unclear. The timing of acquiring authorization
from the government to access a genetic resource remains unclear. The Act contains penalties to
those who do not comply and companies such as Natura have been fined U.S. $12.6 million.12
This uncertainty is detrimental to U.S. business and university researchers trying to perform
biotechnology research that results from the access to Brazilian genetic resources and trying to
commercialize that research for future use.
BIO has heard that a federal court in the State of Acre issued a decision restricting the
definition of “access” of a genetic resource. The court held that simply exploring
features/properties of a genetic resource that was disclosed beforehand in the scientific literature
is not “accessing” a genetic resource triggering requirements under Brazilian law. We have been
told that this may affect the above mentioned litigation against companies that were merely
utilizing products with properties that were previously disclosed a long time ago.
Recently, a new Bill 7735/2014 has been proposed before the Legislature by the
Executive Branch concerning access to genetic resources. This Bill would replace the
Provisional Act that currently regulates the area. The Bill has been prioritized for review;
however, over 100 amendments have been presented and due to other issues before the
Legislature the Bill has not yet gained traction.
12 See http://www.cosmeticsdesign.com/Market-Trends/Natura-accused-of-not-respecting-Brazil-s-biodiversity-laws
17
Curiously the Bill does not refer to access to genetic resources for agricultural or food
products. A second proposed bill drafted by the former Minister of Agriculture has been
circulating in Brasilia. In December 2014, a new Minister of Agriculture was named and it is
unclear whether this second proposed bill regarding access to genetic resources specifically for
the agricultural and food products industries will progress under the new leadership at the
Ministry of Agriculture. If not, access to genetic resources for the development of food or
agricultural products would be regulated by the Provisional Act and not by the Bill currently
before the Legislature.
Bill 7735/2014 does make access to genetic resources a less bureaucratic process;
however, the proposed rules are different for foreign and domestic companies. As this is a Bill
and as there are over 100 amendments, its potential effects on the industry are still uncertain –
although, in general, there is some improvement over the original Provisional Act.
For all of these reasons, BIO requests that Brazil be placed on the Priority Watch List.
Canada
Canada continues to present challenges to the intellectual property rights of BIO’s
members. Canada has joined the Trans-Pacific Partnership (TPP) negotiations, and it is
important that the U.S. Government understands the IP challenges in Canada and holds the
Canadian government accountable during TPP negotiations. Canada’s burdensome standard for
establishing patent utility, restrictive listing requirements, lack of an equitable right of appeal,
injunctive relief and patent term restoration, de-listing patents, threats of disclosure of
commercially confidential information, issues with internet pharmacies, and other issues lead
BIO to request that Canada be placed on the Priority Watch List with an Out of Cycle Review.
Canadian Utility Requirements
One of the most significant threats to biopharmaceutical innovation in Canada emanates
from the burdensome Canadian standard for patentable utility. Canada’s approach to patent
utility discriminates against the biopharmaceutical industry, creates significant uncertainty in the
patenting process, and is inconsistent with Canada’s international obligations.
The Canadian requirement that a patent demonstrate or disclose the basis of a sound
prediction for the subjectively-construed “promise” of utility in the application at the time of
filing is out of step with the WTO Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS), the North America Free Trade Agreement (NAFTA) and the Patent Cooperation
Treaty (PCT). Canada’s utility requirements also stand in sharp contrast to practice in the United
States, which merely requires a specific and practical utility; for pharmaceutical inventions, in
practice this standard is met by disclosing a specific disease against which the claimed invention
is useful.
Since 2005, these onerous utility requirements, which are unique to Canada, have caused
approximately 20 patents for plainly useful pharmaceuticals to be invalidated for inutility in
18
infringement or revocation cases or subjected to a finding that allegations of inutility are justified
in hearings under the Patented Medicines (Notice of Compliance) Regulations (PMNOC
Regulations).13 Utility in fact is all that is required by the TRIPS Agreement and NAFTA.
Under Canada’s burdensome utility test, however, there is substantial uncertainty as to how
much work must be performed and disclosed when a patent application is filed. Further, it is
nearly impossible to predict how a court will interpret the “promise” of the patent in litigation
that occurs many years after the filing of an application and the grant of the initial patent.
The so-called “promise” of the patent is construed by the court on an entirely subjective
basis and with reference to extrinsic factors beyond the claims of the patent.14 This subjective
construction of the patent is then used to justify entirely unrealistic and impractical evidentiary
demands. For example, Canadian courts have required evidence of long-term clinical studies in
patients in order to find utility simply because a drug can be used to treat a chronic condition.15
As discussed below, BIO member companies typically must file their patent applications early in
the development process, and in many cases before clinically conclusive data exists. As such, in
many cases the practical effect of Canada’s “promise doctrine” may be a bar to patentability for
any drug capable of use in the treatment of a chronic condition.
These judicial decisions on a patent’s “promise” and the Canadian policies that require
the “promised” utility to be demonstrated or “soundly predicted” at the time of filing have had a
discriminatory impact on the biopharmaceutical sector, particularly given the unique lifecycle
development for pharmaceutical products. NAFTA and TRIPS require that patents be “available
and patent rights enjoyable without discrimination as to the field of technology,” but Canada’s
doctrine has had disproportionate effects on pharmaceuticals.
13 Decisions invalidating pharmaceutical patents for a lack of utility in infringement or revocation proceedings
include the following: Eli Lilly & Co. v. Teva Canada Ltd., 2011 FCA 220 [Strattera FCA]; Sanofi-Aventis Canada
Inc. v. Apotex Inc., 2011 FCA 300, leave to appeal to SCC refused [2012] SCCA No 19 (QL); Ratiopharm Inc. v.
Pfizer Ltd., 2009 FC 711, 76 CPR (4th) 241, affirmed 2010 FCA 204, 87 CPR (4th) 185 (FCA does not comment on
utility); and Eli Lilly Canada Inc. v. Novopharm Limited, 2011 FC 1288 [Olanzapine], affirmed 2012 FCA 232.
Decisions where allegations of inutility were found to be justified in PMNOC hearings include the following:
Apotex Inc. v. Pfizer Canada Inc., 2011 FCA 236, 95 CPR (4th) 193 [Latanoprost FCA], leave to appeal to SCC
refused [2011] SCCA No 458 (QL); Evista, supra note 3; Eli Lilly Canada Inc. v. Novopharm Ltd., 2009 FC 235, 73
CPR (4th) 253; Pfizer Canada Inc. v. Ratiopharm Inc., 2010 FC 612; AstraZeneca Canada Inc. v. Apotex Inc., 2010
FC 714, 88 CPR (4th) 28; GlaxoSmithKline Inc. v. Pharmascience Inc., 2008 FC 593, 72 CPR (4th) 295; and Pfizer
Canada Inc. v. Apotex Inc., 2007 FC 26, 59 CPR (4th) 183, affirmed 2007 FCA 195, 60 CPR (4th) 177, leave to
appeal to SCC refused [2007] SCCA No 371 (QL); Sanofi-Aventis v. Ratiopharm Inc., 2010 FC 230, 82 CPR (4th)
414; Shire Biochem Inc. v. Canada (Health), 2008 FC 538, 67 CPR (4th) 94. 14 See Eli Lilly Canada Inc. v. Novopharm Limited, 2010 FCA 197, 85 CPR (4th) 413 [Zyprexa FCA] at paragraph
93, leave to appeal to SCC refused [2010] SCCA No 377. 15 See Strattera FCA, (at paragraph 19, quoting the trial judge: “In the case of the '735 Patent, the inventors claimed
a new use for atomoxetine to effectively treat humans with ADHD. What is implicit in this promise is that
atomoxetine will work in the longer term.”). See also Olanzapine, (at paragraph 232: “The chronic nature of the
condition treated by a patented compound must be taken into account when determining whether a patent’s promise
has been demonstrated or can be soundly predicted”); and Latanoprost FCA, (at paragraph 30: “In our case utility
would be demonstrated if the patent disclosed studies showing latanoprost when administered on a chronic basis
reduced intraocular pressure without causing substantial side effects.”).
19
Since 2005, there has not been a single non-pharmaceutical patent revoked for lack of
utility in Canada.16 Ironically, every pharmaceutical patent revoked on this basis was capable of
industrial application since it was, in fact, subsequently industrially applied, and the patented
pharmaceuticals were approved by Health Canada as safe and effective, used by hundreds of
thousands of patients, and, ultimately, continued to be marketed by those who successfully
challenged the patents as “not useful.”
Canada’s unique and burdensome utility test has also been incorporated into Canada’s
Manual of Patent Office Practice (MOPOP). Thus the Canadian Intellectual Property Office
(CIPO) requirements for establishing utility for a patentable invention are also contrary to the
practice of other countries. For example, MOPOP Chapter 9.04, the chapter on utility, requires
that the patent description as filed provide whatever explanation is necessary to supplement the
common general knowledge of the person skilled in the art so as to permit a person skilled in the
art to soundly predict that an invention will have the proposed utility. It also violates the
requirements of NAFTA, TRIPS and the PCT, all of which are in force and binding upon
Canada.
Similarly, under the PCT applicants may seek patent protection in some or all member
countries by filing a single international application. While the sufficiency requirements of the
PCT require that the applicant disclose the invention in a manner sufficiently clear and complete
for the utility of the invention to be carried out by a person of ordinary skill in the art, the PCT
does not require that proof of utility be contained within the application as filed.17
Nor is such evidence typically required post-filing. In Europe, if an invention is alleged
to have a “credible or plausible” utility, so long as the invention does not operate in a manner
contrary to well-established physical laws the invention will be patentable as possessing
industrial applicability (the European equivalent to the utility requirement).18 Similarly, in the
United States, supporting submissions are required only in circumstances where the USPTO
provides evidence that the stated specific and substantial utility is incredible.19 Canada’s
heightened evidentiary requirement is an outlier.
The standard for assessing utility remains improper even in light of recent Canadian case
law. While there have been a number of individual cases that found particular pharmaceutical
patents to have utility, Canada has maintained its promise utility doctrine and unique approach to
patentable utility (demonstration versus sound prediction).20 The Canadian standard remains
subjective and unpredictable, as a patentee cannot reliably know the construction of a patent’s
promised utility. Thus the standard remains inconsistent with international norms.
16 In only one case outside the pharmaceutical sector have any challenged claims been found to lack utility; a distinct
claim under the same patent was upheld as useful, such that the patent remained valid. See Bell Helicopter Textron
Canada Limitée v. Eurocopter, 2013 FCA 219. 17 Patent Cooperation Treaty, Article 5. 18 Patent Cooperation Treaty International Search and Preliminary Examination Guidelines, Chapter 14; See also
Human Genome Sciences Inc v Eli Lilly & Co., [2011] UKSC 51, reversing [2010] EWCA Civ 33, affirming [2008]
EWHC 1903 (Pat). 19 See Eli Lilly and Co. v. Actavis Elizabeth LLC, No. 10-01500, 2011 BL 197400 (Fed. Cir. July 29, 2011). 20 Sanofi-Aventis v. Apotex Inc, 2013 FCA 186; Bell Helicopter Textron Canada Limited v. Eurocopter, 2013 FCA
219; Teva Canada Limited v Novartis AG, 2013 FC 141.
20
Canada’s utility requirements place biopharmaceutical innovators in a difficult Catch 22
dilemma in view of the other substantive requirements for patentability.21 If an innovator seeks
to comply with the enhanced obligations for proof of utility and waits to file an application, then
it increases the risk of invalidity on the basis of lack of novelty or obviousness. In other words, a
biopharmaceutical innovator who might seek to establish utility for a drug that treats a chronic
condition by conducting longer term clinical studies before filing its patent application would
potentially be exposed to an allegation of invalidity based on anticipation.22 Awaiting longer
term study results may effectively deprive a biopharmaceutical innovator of its patent rights in
Canada. BIO members urge the U.S. Government to engage with the Government of Canada
toward finding a solution to these problems and bringing Canadian patent practice in line with
international norms and Canada’s treaty obligations.
Losses
The consequences of Canada’s burdensome utility standards for U.S. companies are
substantial: unpredictability in the patenting process, forfeiture of intellectual property rights
granted in other developed countries around the world, and billions of dollars in lost sales when
patent rights are prematurely terminated by Canadian courts or denied by the Canadian
Intellectual Property Office (CIPO). To date, based on court actions alone, U.S. companies have
suffered damages of more than $750 million from the premature loss of patent protection based
solely on Canada’s outlier patent utility standard based on IMS sales data.
De-Listing of Patents from the Patent Register
Recent jurisprudence has made listing patents on the Patent Register more difficult for
innovators. The Patent Register (the equivalent of the Orange and Green Books) is the gateway
to enforcement of patents under the Patent Medicines (Notice of Compliance) or PM(NOC)
regulations. This is the sole means of enforcement that permits innovators to have patent
infringement and validity allegations assessed while the generic or subsequent entry biologic
manufacturer (SEBM) are permitted to submit their regulatory dossier for approval to Health
Canada. If relevant patents are not listed on the Patent Register, then early working of the patent
rights are permitted without even a preliminary assessment of infringement of the patents
covering the innovative product. Recent jurisprudence has required exact specificity between the
ingredients in the approved combination product and the listable patents. The impact is that
innovative drug companies may not be able to list single ingredient patents for combination
products or such patents could be delisted. In fact, it is our understanding that OMPL has
recently requested delisting of single-ingredient patents listed for FDC products, which enhances
our concern. The only remedy for impacted/delisted single agent patents will be to seek damages
after an at risk launch. This judicial interpretation of listing requirements is inconsistent with
global best practices to ensure adequate and effective enforcement of patents.
21 All the patent laws of major countries require an invention to be new and non-obvious in addition to possessing
utility. 22 See Novopharm Limited v. Eli Lilly and Company, 2010 FC 915, 87 CPR (4th) 301 at paragraphs 46 through 48,
affirmed Strattera FCA, supra note 3, where Novopharm argued that two oral conversations that fell outside the
one-year grace period rendered the invention anticipated.
21
Lack of Right of Appeal in PM(NOC) Proceedings
Also in PM(NOC) proceedings, where a generic or a SEBM wins an initial decision as to
whether allegations of non-infringement or invalidity are sufficient to justify launch of a
competing equivalent product, the Health authority can issue market approval. When this
occurs, the PM(NOC) procedure becomes moot and any appeal is dismissed for mootness. The
lack of an equitable right of appeal therefore remains an enforcement challenge in Canada. The
PM(NOC) regulations create a process and a forum to resolve patent infringement issues and
validity between generic and brand companies as part of the early working regulatory exception
to patent infringement in the Patent Act (Section 55.2). However, practically, the regulations
provide unequal appeal rights in favor of the generic company. A generic company can appeal
the decision in a Notice of Compliance proceeding, but an innovator cannot. Any changes to
rules surrounding PM(NOC) proceedings must acknowledge that even with a patent
infringement action under the current procedure, complete redress remains illusory. The recent
acceptance of the Canada-European Union Comprehensive Economic and Trade Agreement
(CETA) may resolve this issue by including a provision that ensures a general commitment by
the Canadian government to “ensure litigants are afforded effective rights of appeal, which gives
scope for Canada to end the practice of dual litigation.”23 However, the USTR will need to
monitor implementation to ensure that innovators are adequately protected by this provision.
Lack of Appropriate Injunctive Relief
A related issue is that Canadian jurisprudence takes the view that monetary damages are
sufficient. Interlocutory injunctions to prevent market entry are rarely granted. Even if the
biopharmaceutical patentee prevails, there is a significant loss of reasonable opportunities to
enjoy the full benefits of the patent. Justice Moore of the U.S. Court of Appeals for the Federal
Circuit has commented that the loss of market to a generic is likely irreparable harm in this
industry (Sanofi Aventis et al., vs. Sandoz et al., US Court of Appeals for the Federal Circuit,
2009, 1427-1444).
Lack of Patent Term Restoration
Canada lacks patent term restoration which restores the loss to patent term caused by
lengthy clinical trials and the regulatory approval process. The recent acceptance of the Canada-
European Union Comprehensive Economic and Trade Agreement (CETA) may resolve this issue
by including a provision that ensures a general commitment by the Canadian government to
ensure Patent Term restoration of up to two years. However, the USTR will need to monitor
implementation to ensure that innovators are adequately protected by this provision. Likewise,
there exists in Canada no meaningful ability to mitigate the effects of wrongful generic entry on
the basis of a court’s application of incorrect principles of law. Damages or profits are often
poor compensation for the loss of the innovator’s market position following generic entry.
23 Technical Summary of Final Negotiated Outcomes, Canada-European Union Comprehensive Economic and
Trade Agreement. Accessed at http://www.actionplan.gc.ca/sites/default/files/pdfs/ceta-technicalsummary.pdf
22
Bill C-17
Canada recently passed Bill C-17, An Act to Amend the Food and Drug Act which makes
revisions to the Food and Drug Act. Some of the provisions in this bill conflict with Canada’s
international obligations under the TRIPS Agreement. Certain amendments allow the Minister
of Health to disclose confidential business information (CBI) ) to members of the public, foreign
governments, and competitors, without confidentiality obligations or other protections again
‘unfair commercial use’ required by TRIPS Article 39.3.24 This directly places the billions of
dollars invested in this data at risk and has repercussions across the globe, as competitors in other
markets outside Canada could rely on this data. The USTR should monitor implementation to
ensure innovators confidential business information is adequately protected from disclosure and
should ensure this issue is resolved satisfactorily prior to entry into force of the TPP vis a vis
Canada.
CETA Implementation
USTR should monitor Canada’s implementation of the Comprehensive Economic and
Trade Agreement (CETA) with the Europe Union. The Canadian government has indicated that
generic manufacturers will be allowed, in accordance with the agreement, to manufacture
infringing generics for export while the patent term restoration period remains in effect.
Internet Pharmacies
The Canadian government continues to refuse to correct certain practices by Canadian
internet pharmacies. These practices include marketing directly to U.S. consumers unauthorized
and counterfeit drug products violating the rights of patent holders and posing significant public
health risks to U.S. patients. Canadian border officials have no authority to act ex officio with
respect to unauthorized and counterfeit products and this authority must be corrected to meet its
existing obligations
Orphan Drug Market Access Issues
In 2013, the Canadian Agency for Drugs and Technologies in Health (CADTH) indicated
a willingness to consider a unique process for Ultra Rare Diseases (URD). However, CADTH
decided to use the same process for URDs as they use for traditional drugs including a cost
effectiveness analysis. Orphan Drugs and URDs are different from traditional drugs as they are
indicated for rare conditions with limited data available to conduct a traditional drug assessment
for approval or a cost effectiveness analysis. Due to smaller patient populations, traditional
review and cost assessment analysis is inherently limited due to smaller amounts of data. As a
result of these concerns, BIO members that produce medicines for orphan diseases are unfairly
disadvantaged in their access to the Canadian market.
24 See Bill C-17, Clause 3, amendments after section 21; Clause 6, amendments to section 30 after subsection 1.1 and AdvaMed, BIO and PhRMA’s full comments at https://www.bio.org/advocacy/letters/bio-phrma-and-advamed-submit-comments-response-canadas-wto-notification
23
Pricing for Patented Medicines
Canada’s Patented Medicines Review Board (PMPRB) has jurisdiction over ex-factory
pricing of patented drugs and routinely imposes significant price controls. This forces innovators
to choose between maintaining their patent rights and obtaining a fair price for their products. In
addition, the PMPRB asserts jurisdiction not only when a patent actually covers an approved
product but in any circumstance where there is even the slightest tenuous relation (a “mere
slender thread”, as the courts have put it) between the patent and the product, e.g. a patented
container technology that is not used-- but could someday be used-- for a patented medicine. The
result is that price controls are imposed on unpatented medicines because patents exist that
“pertain to” them but do not cover them. Companies are at risk of having to surrender not only
the patent rights that protect their innovative products but also rights that have little or no
meaningful relationship to those products.
Patent requirements related to utility, eligibility for listing, an inequitable right of appeal
in PM(NOC) decisions, lack of both injunctive relief and patent term restoration, de-listing
patents, threats of disclosure of commercially confidential information, and issues with internet
pharmacies have led BIO to request that Canada be elevated to the Priority Watch List with an
Out of Cycle Review. While some of these issues may be resolved by CETA, BIO requests that
USTR continues to monitor these issues until full and fair implementation occurs.
Chile
No data protection for biologics, U.S.-Chile Free Trade Agreement (FTA)
noncompliance, lack of patent term adjustment or patent term restoration, and other patentability
issues, has convinced BIO to request that Chile remain on the Priority Watch List.
The patent examination process suffers from excessive delays. Additionally, it remains
difficult to enforce patents in the courts due to a lack of technical expertise on IP matters and a
perceived lack of independence of the judicial branch on IP sensitive matters.
Chile does not provide adequate protection of data that is required for submission in
support of applications for marketing authorization for biopharmaceuticals consistent with its
obligations under Article 17.10.1 of the U.S.-Chile FTA. Further, Chile does not provide data
protection for biological medicines as required under the same Article of the FTA and as
required under TRIPS. This protection is essential for marketing of biopharmaceuticals in key
markets. For small molecules, the Chilean laws undermine this protection by placing onerous
conditions on the availability of this protection. They also provide that such protection may be
revoked for broad grounds, including “reasons of public health, national security, [and] public
non-commercial use,” among other circumstances. These provisions are not consistent with
Chile’s obligations under either the FTA or Article 39.3 of the TRIPS Agreement.
Further, Chile is not in compliance with its obligations under Article 17.10.2 of the US
Chile FTA to refrain from granting marketing approval for a drug to a third party prior to
24
expiration of a relevant patent. This is highly important to prevent infringement of BIO member
patents. The lack of protection is particularly troubling in light of Chile’s clear obligations under
the FTA.
In addition, Chile’s patent laws do not provide sufficient patent term restoration,
consistent with obligations under the FTA, to fully compensate for unwarranted delays in the
marketing approvals process. The patent law in Chile also excludes transgenic plants and animals
from patent protection, thereby further limiting the availability of meaningful protection for
valuable biotech innovations. To the extent that protection is available, significant backlogs
delay ability to obtain rights essential to adequately protecting these inventions.
Our member companies have also noted that the Patent Office has very short deadlines.
Some members have been asked to respond to Office Actions in one month or less, which are
among the shortest in the world and appear to be arbitrary. Other countries typically allow six
months to respond to their office actions.
Other members have encountered difficulty obtaining claims addressing dosage regimens
(i.e., where drugs are administered at a specific dose or in combination with other drugs).
Increasing the types of patent protection available to cover approved uses of drugs would help
biotechnology companies in Chile. Countries that restrict the patentability of human treatment
typically allow coverage for the use of the drug for treatment so that there is patent coverage of
commercial sales of the drugs (rather than the treatment method per se).
Chile’s intellectual property regime falls short of its obligations in a number of ways that
deny protection for biotechnological inventions. In light of these and other deficiencies of the
intellectual property regime in Chile, and particularly in light of its apparent lack of compliance
with the U.S.-Chile FTA provisions, BIO requests that Chile remain on the Priority Watch List.
China
China’s large consumer market presents unique opportunities for U.S. biotechnology
companies to increase exports and create jobs in the United States. However, failure to
adequately protect U.S. IPR greatly affects BIO’s members. In fact, the United States
International Trade Commission reported that in 2009 U.S. businesses that operated in China lost
approximately $48.2 billion in sales, royalties, or license fees due to IPR infringement.25 For the
reasons stated below, BIO requests that China be placed on the Priority Watch List.
Patent Office (SIPO)
Our companies have reported that obtaining patent claims of reasonable scope is difficult
in China. The examiners use the data requirements to restrict value. Variation from examiner to
25 United States International Trade Commission, China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy, USITC Publication 4226, May 2011.
25
examiner is high and the appeal process is difficult. Finally, SIPO should consider accelerated
examination processes to help compensate for the examination backlog.
SIPO has also invalidated important biotechnology patents protected elsewhere around
the world due to lack of novelty and other patentability concerns. BIO hopes that USTR
monitors these developments closely to ensure that the Chinese government is not creating
arbitrary standards out of harmony with those standards of other developed markets around the
world.
Biotechnology companies appreciate the 2009 amendments to the patent examination
guidelines that protect medicinal inventions based on new properties. The guidelines recognize
the non-obvious inventions based on drug optimization. However, SIPO applies a strict
requirement for the inclusion in the patent application of experimental support for the new
claimed usage. In other words, a company cannot subsequently show experimental support
during prosecution. The requirement results in a delay that allows the competition to file first in
China, even when they are not the original innovator.
BIO’s companies have also faced a few issues with SIPO’s requirements involving
confidentiality or secrecy examination. The level of detail about the invention required in the
submission for secrecy examination is high and therefore requires a substantial amount of time to
draft the document for submission for secrecy examination. Thus, meeting this high level of
detail would significantly delay the filing in a foreign jurisdiction. It is BIO’s hope that as long
as the submission document provides sufficient information for the reviewing examiner to
determine that the subject matter is of a nature that is not restricted or prohibited, permission
should be granted for foreign filing.
Biotech companies also find it difficult to determine how to define an invention “made in
China” and thus whether first filing or secrecy examination in China is required. In
pharmaceutical and biotechnological companies, many inventions are conceived by scientists in
R&D centers outside China, but some data were collected in China. In such circumstances, no
inventors are from China. It would be very cumbersome if such inventions need to be first filed
in China since SIPO is not competent to be the Receiving Office for the PCT.
Adding new matter to an existing application in secrecy examination has proven difficult.
While the new matter does not change the general nature of the invention, the rules remain
unclear on whether a second secrecy examination is required for the new matter. BIO members
believe a second examination should not be required as the general nature of the invention
remains unchanged. Obtaining the secrecy clearance takes about one month leading to at least
one month loss of priority year, especially for foreign filings in non-PCT countries.
A recent SIPO interpretation of the invention enablement requirements also presents
challenges for U.S. companies in China. The new requirements limit the interpretation of the
invention enablement to the disclosure in the examples of a patent application, or in other words,
the examiner looks no further than the working examples of the case. In biotech applications, it
appears that SIPO does not consider the use of percent identity or hybridization conditions as
clear unless these are specifically used in the working examples to define breadth. As a result,
bio-informatic methods of defining sequence scope acceptable in many countries are not
26
recognized as clear within China. These requirements are problematic as biotech research is
expensive and developing the number of working examples necessary to cover all embodiments
may not be possible. The nature of industrial microbiology often requires a generic claim scope
due to the redundancy found in nature (i.e., enzymes from different sources). Slight variations in
structures are essentially impossible to protect.
BIO understands that current practice in China only allows applicants to supplement data
of the reference compound or biologic to overcome the lack of inventiveness rejection. The data
for the invention compound cannot be submitted. However, submission data after the date of
filing should be allowed during prosecution because the applicant cannot know which prior art
will be regarded as the closest prior art at the time of filing.
In addition, U.S. companies seeking to bring innovative therapies to market in China face
additional hurdles posed by China’s improperly retroactive application of new guidelines related
to Article 26.3 of its patent laws.
Today’s life-saving drugs are primarily protected by patents issued from patent
applications filed well before 2006. Biopharmaceutical companies followed SIPO’s examination
guidelines effective before 2006 in describing their new drugs and methods of preparation and
medical uses of the new drugs. Chinese patent examiners, in a manner consistent with pre-2006
guidelines, allowed applicants to submit post-filing pre-clinical and clinical data to support
patentability of the new drugs.
In 2006, however, SIPO amended its Examination Guidelines for chemical inventions
and disallowed examiners from considering post-filing data in support of the patentability of the
new drug inventions, even with respect to patent applications filed well before 2006. SIPO made
the data sufficiency guidelines by interpreting Article 26.3 of the Chinese Patent Law. Key to
note is that Article 26.3 itself has not materially changed since China enacted patent laws in
1984.
Further complications are created by the fact that SIPO’s Patent Reexamination Board
(PRB) has allowed parties to use the 2006 version of the guidelines related to Article 26.3 to
invalidate chemical patents issued from applications filed before 2006. Such retroactive
application of the guidelines renders numerous new drug patents issued from applications filed
before 2006 vulnerable to invalidation. Innovators could not possibly have been aware, pre-
2006, of the high standards imposed by the 2006 guidelines and could not comply, post-2006,
with the rule by submitting post-filing data. The pernicious nature of the retroactive application
of 26.3 rule has been exemplified, e.g., in cases in which individuals demanded that
biopharmaceutical patent owners pay them in exchange for dropping invalidation requests based
on the new 2006 guidance related to Article 26.3.
We understand that, at the 2013 U.S.-China Joint Commission on Commerce and Trade
plenary meeting, China agreed to cease retroactive application of the 2006 guidelines related to
Article 26.3. Feedback BIO has received has indicated that very few cases are currently being
rejected under Article 26.3. However, BIO urges USTR both to continue to maintain a close
watch on this issue and specifically to address this issue in its Special 301 Report.
27
China has a plant variety protection (PVP) law in force, and its patent law excludes patent
protection for plant varieties, which, on paper, fits very well with TRIPS obligations and would
provide a workable IP landscape for innovator companies in the field of agriculture. However,
the SIPO has introduced certain deviations from the wording of the patent law in its Guidelines
for Patent Examination, 2010. From an exclusion limited to animal and plant varieties in the
Patent law, the SIPO Guidelines have broaden the exclusion to any animal and any plant claimed
in generic terms (i.e. beyond plant varieties). As consequence, the SIPO has created a significant
gap in intellectual property protection for inventions in the field of agriculture. Innovators of
plant-based inventions that are applicable to many plants or to many plant varieties cannot obtain
adequate protection for their inventions either with patents ("plants" broadly excluded from the
Guidelines) or from PVP (only applicable to plant varieties). Amending the SIPO Guidelines by
limiting the exclusion to "plant varieties" instead of "plants" (and "animal races" instead of
"animals") should positively remove this gap of protection for agriculture innovations, and
would at the same time align the SIPO practice with the Chinese patent law.
Finally, SIPO should include more information on its electronic system where the public
can access information including prosecution histories before patent grant and for granted
patents. These resources should also be available by paper. BIO also hopes that for any given
case the complete file history is made available in complete form so that all parts of the file
history are accessible by the public.
Patent Law
Chinese patent law limits the ability to secure intellectual property on methods of
surgery, therapy, and diagnosis. China permits Swiss-type claims, but not method of treatment
claims. While this is allowable under TRIPS, Chinese law limits the types of IPR most biotech
companies seek to protect as they want to protect, both their drug compounds and how they are
used. Many companies also rely heavily on formulation patents to protect the pharmaceutical
development.
Another challenge for biotechnology companies in China involves the lack of patent term
restoration provisions to compensate for regulatory review and patent office delays. The patent
examination backlog at SIPO and regulatory review delays at CFDA significantly curtail the
rights of IP owners. Other nations include patent term adjustments for patent review delays and
patent term extensions to compensate for the time it takes to gain regulatory approval for
pharmaceutical and agricultural products. This is particularly true of countries, having so-called
Bolar provisions, which allow the development of generic products during the term of the patent.
China has adopted a Bolar provision without a system of patent term restoration. A Bolar
provision without the ability to recoup the time lost for regulatory delay represents an
unbalanced system and is detrimental to innovator companies.
Chinese law also makes it difficult to establish claim priority from earlier-filed
applications. Chinese law allows priority for a provisional or other application only through
providing evidence that the inventors listed have assigned their rights to the applicant. This
evidence may not be available as inventorship often is not fully determined in a provisional
application. Under U.S. law, a provisional application need not recite any claims that precisely
define what the inventor believes his invention to be. As a result, it is common practice for
28
inventorship to differ between a provisional application and subsequent non-provisional (or
international) application. If an applicant cannot produce an agreement from the inventor which
expressly assigns his rights to the applicant, then Chinese law will not permit the applicant to
claim priority from the application.
China enacted the Third Patent Law Amendments in December 2008. The amendments
entered into force in October 2009. BIO’s members are concerned about some of the changes
made in these amendments. In particular, Article 5 of the Chinese Patent law prohibits patents
for inventions “relying” on genetic resources where the acquisition or use of those resources is
contrary to the “relevant laws and administrative regulations.” This could result in the rejection
of applications for deserving new and useful inventions, or even the revocation of granted
patents later found inconsistent with these provisions.
Further, the amendments to Article 26 for the first time require patent applicants to
indicate the “direct source” and the “original source” of genetic resources if the completion of
the claimed invention relies on genetic resources. These amendments appear to be intended to
promote compliance with provisions of the Convention on Biological Diversity (CBD) relating
to access to genetic resources and equitable sharing of benefits from utilization of these
resources. However, such provisions will not further these goals, which can be accomplished
most effectively by improved transparency in national access and benefit-sharing regimes. The
failure to identify the “direct source” of a biological material used in the invention is apparently
also a basis for denying a patent to an otherwise deserving invention. In the case of the “original
source,” failure to disclose may also result in denial of a patent unless the inventor can “state the
reasons” that the original source “could not be explained.” These special disclosure requirements
impose unreasonable burdens on patent applicants, subjecting valuable patent rights to great
uncertainty. Moreover, the Implementing Regulations define “genetic resource” to include
“material from the human body.” This goes beyond the scope of the CBD, which excludes
human genetic resources and, consequently, the scope of requirements is additionally
complicated.
These amendments also do not appear to be consistent with China’s obligations under the
TRIPS Agreement to make patents available for “any inventions” that are new, have an inventive
step, and are capable of industrial applicability. Further, the additional requirement for
inventions in a particular field of technology (i.e., inventions involving genetic resources) is not
consistent with China’s obligation to make such patents available, and patent rights enjoyable,
“without discrimination … as to field of technology.” The amendments concern BIO as they
could prevent the issuance of patents for new and useful biotechnology inventions, or perhaps
the revocation of granted patents later found inconsistent with these provisions. Thus, these
requirements should be deleted. To the extent that rules remain in force, however, we suggest
that, at a minimum, the initial burden shift to the examiner to first identify which material the
applicant must show “source.” Without such identification, the requirement should not apply. It would also be suggested that at best any disclosure requirement is limited to the disclosure of the direct source from which biological material - that is directly claimed in the patent application – is obtained. Also, there should be no obligation to disclose the source of any biological material if such material was already the subject of a public disclosure prior to the filing of the patent application. In the latter case the citation to such publications should be sufficient to comply with the disclosure requirement.
29
The amendments to Articles 48 to 52 of China’s patent law provide changes with respect
to compulsory licensing of inventions. BIO supports a number of changes in this area. For
example, SIPO should clarify what constitutes inadequate working in China and should state that
clinical and/or preclinical works related to getting CFDA approval should be considered
adequate working in China. However, significant clarification regarding the events that would
trigger compulsory licensing, as well as the scope and duration of the licenses granted, is needed.
China did issue Draft Measures for the Compulsory Licensing of Patents in October of
2011 to try to clarify the compulsory license process and seek comment. BIO commented on the
Draft Measures requesting clarification on key terms, recommending that importation of the
patented product constitutes exploitation of the patent in China, calling for a prohibition on the
export of compulsory license product to developed countries, as well as some procedural
recommendations.26
Finally, in 2012 China released a draft regulation on service inventions regulating the
contractual liberty between the employer and employee. The draft regulation proposes
unnecessary restrictions on enterprises and their contractual relationships with inventors and
would likely lead to disputes and litigation on inventor remuneration. There is much uncertainty
about how the regulations are to be interpreted and applied. For example, although the proposed
regulations allow companies to enter into agreements with employees or have rules on service
invention award and remuneration, an agreement or rule can be determined to be invalid if
judged as eliminating or limiting the rights that the inventor is entitled to according to the
regulations. Another example is it seems inventors have the first right of refusal to acquire the
company’s patent right if the company wants to assign it and there is uncertainty whether this
first right of refusal can be waived by agreement. (Although the provision on this first right of
refusal is no longer present in a recent draft, it is not certain whether this provision will reappear
later in the regulations; furthermore, the Chinese Contract Laws have a similar provision.) Such
regulations will likely disincentivize companies from conducting research and development in
China.
Enforcement
Some biotechnology companies have commented that China’s processes and remedies for
patent infringement and trade secret misappropriation are ineffective. China requires U.S.
companies to pursue enforcement actions at the provincial level with no central coordination.
This allows suspects to escape prosecution through the use of diffuse networks to sell counterfeit
goods. Local politics also makes it difficult to affect change. Enforcement authorities generally
are skeptical or dismissive of infringement claims by local competitors and usually try to
dissuade any attempt to use the courts, preferring “local arbitration or mediation,” which tends to
produce few results.
Chinese law also requires proof that violations in counterfeit activity exceed threshold
values before any action is taken by authorities. While this provision does seem to recognize the
26 For a full list of recommendations please see China Compulsory License Proposed Provisions Draw Reaction from BIO accessed at http://www.bio.org/advocacy/letters/china-compulsory-license-proposed-provisions-draw-reaction-bio
30
limited resources and prioritization of Chinese enforcement, violators have adjusted by operating
in diffuse networks to make enforcement more challenging. Overall, criminal penalties are
insufficient and law enforcement is slow to act.
Chinese manufacturers that only export their products are not subject to regulatory
oversight or review. As a result, infringing products manufactured in China are often of low
quality. Some companies have suggested that evidence exists that competing pharmaceutical
products are of such inferior quality that they would not meet FDA approval. Company
representatives were able to purchase counterfeit goods in China and in jurisdictions outside of
China indicating inadequate export controls. Internet pharmacies and other illicit distribution
routes allow the counterfeits to enter foreign markets with intellectual property protection for
those products. Chinese counterfeits are entering the U.S. market as evidenced by Attorney
General Holder’s announcement on November 29, 2010, that the United States seized 82
websites offering counterfeit Chinese goods. The notorious counterfeit markets in China are
Shandong, Guandong, and Fujian provinces.
Finally, Chinese law does not allow preliminary injunctions to stop the export of
infringing products. Since the courts need to decide preliminary injunction requests within 48
hours, courts simply do not accept them. Many have suggested that the courts be given enough
time to decide the injunction requests. However, in the biopharmaceutical area, it is critical that
patent issues are resolved before product launch. Thus, China should either have an effective
process for preliminary relief, or there should be a patent linkage process, allowing the
regulatory body to withhold approval of a generic product until the patent issues are resolved in
the courts.
BIO requests USTR to continue to promote more effective enforcement directed to
combat the distribution of counterfeit biopharmaceuticals in China.
Courts
BIO responded to requests from the United States Patent and Trademark Office for more
information on patent enforcement in China. In BIO’s submission27, our companies identified
several issues that make it difficult to enforce a patent in China mainly involving the Courts.
Chinese law requires that the product is actually sold in China before a patent holder can
bring an infringement action. It is not enough to produce the infringing product, or seek
regulatory approval of the infringing product. Additionally, the Supreme Peoples’ Court has
cautioned lower courts from issuing preliminary injunctions for ‘complicated’ technologies (like
biotechnology). The rules also require a decision on a preliminary injunction within 48 hours.
Given these restrictions, it is unlikely that any Chinese judge would issue a preliminary
injunction. Biotechnology companies are left to try to obtain an injunction after conclusion of
the litigation which will still not restrict the CFDA from approving other generic applications.
Even when our innovator company wins an infringement suit, damages are insufficient to
cover the true nature of the loss. China provides statutory compensation for infringement which
is minimal and considers sales in China and not outside the country. When combined with the 27 See http://www.bio.org/advocacy/amicus-brief/china-patent-enforcement-comments-uspto
31
inability to get preliminary injunctions, low damages does not serve as a deterrent for infringers.
Further, cumbersome notarization requirements, problems with discovery procedures, and lack
of compliance with court orders (because they are not enforced upon the infringing party) greatly
hinders the innovator’s ability to prevail in an infringement suit. Finally, China restricts expert
testimony to government or court-sanctioned experts who are not familiar with the technology
and cannot adequately testify in an infringement action.
Finally, wide spread abuse of utility model patents occurs and injunctions based on utility
model patents should not be granted until the utility model has been examined and deemed valid
by SIPO.
Regulatory Bodies
Under Chinese regulatory approval laws regarding generic drugs, if the innovator drug is
approved and being marketed in another major market, then a generic company can receive
approval in China. This loophole allows generic companies to file and gain regulatory approval
in China before the U.S. innovator company. In addition, if the generic company has filed an
IND and received approval in China before the U.S. innovator company, then the generic
receives five years of exclusivity. This blocks the innovator from receiving approval for those
five years. Some companies have successfully sued these generic companies under process
patents, but the problem remains. Innovator companies often chose to file an IND in China
before they know whether or not they are going to bring their product to market in China to
preserve their right to enter the market and to protect themselves from generics gaining
exclusivity for the innovator’s drug.
The Third Patent Law amendments also add a “Bolar exemption” to patent infringement
for pharmaceutical products in Article 69(5). However, unlike the law of many countries that
provide this exemption, the exemption codified in the patent law amendments is not balanced by
extensions of patent term to compensate patent owners for delays encountered in the regulatory
approval process. Without such a balancing provision, the amendment, standing alone, does not
provide equitable treatment to owners of intellectual property rights relating to pharmaceutical
inventions.
China has implemented a six-year data exclusivity term for pharmaceutical and
agricultural chemical products. However, this term is not applied in practice in a manner
consistent with adequate and effective protection of regulatory approval data. The law, as
currently implemented, does not provide the level of protection that is necessary for
biopharmaceutical entities to bring products to market, and permits unfair commercial use of
pharmaceutical test data developed by innovators. The definition of “new drug” is interpreted as
“new” anywhere in the world rather than new in China allowing much earlier generic entry.
Thus, generic products are approved before the 6 year period has expired, and in some cases
generic products have been approved before the innovator product has been approved. Finally,
no patent linkage exists to help ensure that innovators know when generics have violated their
intellectual property rights, as described above. The regulatory body should be allowed to
withhold approval of a generic product pending resolution of the patent issues in the courts.
32
Data exclusivity enforcement also arise when generic companies apply for registration as
a category 3 drug. China classifies new drugs into 5 categories with Category 1 relating to new
drugs which have not been launched anywhere in the world. Category 3 drugs have already been
launched in a country outside China but not in China. For Category 3 drugs, only require
innovators to provide a pk study and a 100 pairs of randomize clinical trial data because the other
data has been provided to other markets during registration. Generic companies have been trying
to use the Category 3 designation to get approval in China without providing phase 1-3 clinical
studies during the data protection period undermining the innovator’s IP rights in China.
A final issue involves government sponsorship of the manufacture of infringing products.
The National Program for the Development of Major Drugs is a government sponsored program
which funds the manufacture of generic versions of U.S. patented pharmaceuticals. The Ministry
of Health and the CFDA are both stakeholders in this program. This creates a conflict of interest
and a specific challenge for U.S. biotech innovators as often their competition is the Chinese
government itself.
Other Laws Affecting U.S. Intellectual Property Rights
The Corporate Income Tax Law revision in 2007 requires China registered legal entities
to “own IP” as one of the essential prerequisites to qualify for “high-tech status” and enjoy a
lower tax rate of 15% compared with the average 25%. As China’s IP atmosphere is risky for
foreign firms, many multinationals and U.S. companies tend to license, instead of letting the
local entity “own,” the IP. The tax requirement makes it difficult for U.S. companies to partner
with Chinese companies and retain the “high-tech” status, regardless of the high technology
content of their activities in China.
Another problematic Chinese law involves the regulation and laws of intellectual
property licensing. China statutorily prohibits a Chinese party to agree to restrictions on its
ability to obtain competing technology to that which is licensed from other sources. In addition,
U.S. companies may not place restrictions on the export of products made using licensed
technology, thereby making it difficult to license technology based on geographically defined
fields. Chinese law also will not permit a Chinese entity under contract with a foreign entity to
agree to terms that protect U.S. IPR interests. These terms include agreeing to not improve the
technology, prohibiting reverse engineering, or granting back improvements in the technology to
the licensing party unless there is separate consideration for such improvements. Absent separate
agreement, and possibly approval from the government, improvements are deemed owned by the
licensee. The inability to restrict the development of improvements and reverse engineering is
particularly problematic for biotech inventions.
33
Ecuador
The Ecuadorian Institute of Intellectual Property (IEPI) has issued nine compulsory
licenses, six of which occurred in 2014. This represents a dramatic shift in direction for their
respect of intellectual property rights and there are reports that more compulsory license
applications for medicines across multiple therapeutic areas have been filed in Ecuador.
BIO appreciates the government’s need to expand access however, the decision to
maintain policies relying on compulsory licenses ignore other more effective options for
increasing access, undermines the ability to adequately protect intellectual property, and provides
a powerful disincentive for our members to do business in Ecuador. BIO continues to believe
that the most effective global solutions for increasing access to medicines will result from
policies that respect and encourage innovation.
Since October 2012, fees for patents have drastically increased in Ecuador. The impact
of this increase is mainly seen in the maintenance and examination fees. For maintenance fees,
fees have increased between 800% and 3529% (e.g. up to USD 4,514 and USD 20,760 for the
10th and 20th year respectively). The cumulated annuities amount results in USD 24,964 for 10
years and USD 139,767 for 20 years. At the time of the increase, the amounts were respectively
12 and 24 times higher than Colombia, 7 and 12 times higher than Brazil, 7 and 11 times higher
than the U.S.
Examination fees were raised from USD 196 to USD 964 to USD 1,510.40 depending on
the number of pages or claims. While international applications have page fees of USD 16 for
more than 30 pages, Ecuador charges USD 151.04 per page for more than 19 pages.
Ecuador also has yet to implement the specialized IPR courts required under Ecuador’s
1998 IPR law. Finally, Ecuador does not offer effective data protection of data submitted for
marketing approval of pharmaceutical and agricultural products.
Finally, Executive Decree No. 522 may result in the inability of, or at least may severely
limit an innovator’s ability to use their trademarks once a patent expires. While still unclear, the
decree seems to state that once a patent expires for the reference medicine the innovator may no
longer use its trademark by stating, “It is forbidden to sell generic medicines exclusively with a
given trademark.” USTR should seek clarity from the Ecuadorian government to ensure U.S.
trademarks are protected.
BIO’s members encourage the United States government to place Ecuador on the
Priority Watch List and to conduct an Out of Cycle Review to monitor the IP and compulsory
license developments in Ecuador.
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India
India is an important market to biotechnology companies and patents on key products
result in sales of hundreds of millions of dollars. However, difficulty in obtaining and enforcing
intellectual property rights in India remains a barrier to biotechnology companies. BIO is
encouraged by the new willingness to engage all stakeholders by the new government but
uncertainty remains.
Since the start of the new Indian government led by Prime Minister Narendra Modi, the
United States and India have re-started discussions on a variety of trade and IP fronts. Most
notably, the two countries have agreed to establish a new High-Level IP Working Group that will
meet at least annually. In addition, the two countries met last November 2014 under the auspices
of the Trade Policy Forum and the High-Technology Cooperation Group for the first time in two
years. These are important milestones and the innovative biotechnology industry will be
watching closely developments in these various forums.
Separately, the industry has noted some other developments in the environment for IP-
intensive industry. For example, the announcement that the Department of Industrial Policy &
Promotion (DIPP) would not issue a compulsory license as requested by the Ministry of Health
and Family Welfare, effectively raising the standards required by the Indian government before
issuance of a compulsory license. In addition, DIPP commissioned a National IPR Think Tank
tasked with developing a new National IPR Policy, a draft of which was released in late
December 2014. In reviewing this draft, BIO has found that while the authors express the need
for respecting IPR, they do not necessarily give a strong rationale for doing so, thereby missing
an opportunity to impress upon the government and the public how strong and effective
enforcement of IPR is beneficial to India’s economic development. Finally, in regards to this
draft IPR policy, the authors do not address some of the more controversial issues being debated,
such as compulsory licenses. Again this is a missed opportunity to articulate the government’s
position on this and other critical issues. BIO looks forward to further opportunities to share our
views with the Indian Government on this draft policy.
In recognition of both the improvement in the IP environment and the willingness to
engage in dialogue, therefore, BIO requests that USTR designate India to the Priority Watch
List with an Out of Cycle Review to monitor IP rights in India.
Patent Law and Patentability Standards
U.S. biotechnology companies have limited capability to obtain valid patents for
inventions based on formulations, dosage forms, or chemical variations of an earlier patented
product. India imposes higher standards in these areas than are found in the vast majority of
other countries. Patents on such inventions are crucial to incentivize biotechnology companies to
continue to investigate their discoveries and improve their own products.
Section 3(d) of the Indian Patents Act explicitly excludes from patentability new forms of
a known substance that does not result in “enhancement of the known efficacy of that
substance.” This requirement, generally interpreted to mean “clinical efficacy”, excludes from
35
patentability many significant inventions in the pharmaceuticals area, e.g., new forms of known
substances with improved heat stability for tropical climates, or having safety or other benefits
that may not result in “enhanced clinical efficacy” per se but still provide very real benefits to
patients. Even if not removed, new forms of a substance that have benefits to the patient with
clear support for its therapeutic improvement should be central to the concept of “improved
efficacy” yet are noticeably absent in consideration for granting a patent. In addition, this
provision appears to be inconsistent with India’s obligations pursuant to Article 27 of the TRIPS
Agreement, which requires that patents be made available to “any inventions … in all fields of
technology, provided that they are new, involve an inventive step and are capable of industrial
application.” Section 3(d) also creates an additional hurdle to patentability that is applied only to
certain chemical products, and therefore appears to violate the non-discrimination clause with
respect to field of technology set forth in TRIPS Article 27.
While TRIPS Article 27.3 allows member states to exclude method of treatment claims,
pursuing that course may not be in India’s best interests. India excludes method of treatment
claims, which prevents U.S. biotechnology companies with needed treatment methods from
entering the Indian market to provide life- saving products. Further, other patent offices that
prohibit method claims (such as the European Patent Office and the State Intellectual Property
Office (SIPO) in China) allow claims for the “use of compound X in preparation of a
medicament for treating disease Y” or “compound X for use in treating disease Y.” The lack of
flexibility in India’s law prevents biotechnology companies from seeking protection and bringing
their products to India.
India’s Patents Act requires applicants to disclose the source and geographical origin of
biological materials used to make an invention that is the subject of a patent application. Further,
the applicant must obtain approval from the India National Biodiversity Authority even when the
materials are not native to India (a requirement that seems to only apply to non-Indians). These
special disclosure requirements impose unreasonable burdens on patent applicants, subjecting
valuable patent rights to great uncertainty. Under the Indian law, the failure to identify the
geographical source of a biological material may be a basis for opposition or revocation
proceedings; however, the necessary relationship to the patented invention is not clear. These
requirements pose unacceptable risks for patent applicants, seem to discriminate on the basis of
national origin, and undermine the incentives of the patent system to promote innovation in
biotechnological inventions. Further, such requirements are not consistent with India’s
obligations under the TRIPS Agreement.
India’s plant variety protection (PVP) law has been in force since 2005, however, India
excludes patent protection for plants in generic terms (i.e. beyond plant varieties). As a
consequence, the Indian government has created a significant gap in intellectual property
protection for inventions in the field of agriculture. Innovators of plant-based inventions that are
applicable to many plants or to many plant varieties cannot obtain adequate protection for their
inventions either with patents ("plants" broadly excluded) or from PVP (only applicable to plant
varieties). Amending Section 3(j) of the Patent Act by limiting its exclusion to "plant varieties"
instead of "plants" (and "animal races" instead of "animals") should positively remove this gap of
protection for agriculture innovations.
36
Also, certain innovations in the agriculture sector may qualify as "living thing occurring
in nature", which are excluded from protection under Section 3(c) of the Indian Patent Act.
However, such innovations require much investigations and investments to be identified as
useful for agriculture, and removal of such exclusion would be as much necessary to maintain
the investments in the development of such innovations addressing the challenges of agriculture.
Moreover, India has failed to extend protection under PVP to all crops, thereby
increasing the identified gap for such crops. Currently, there is no mechanism for appeal and the
transitional provision required by the PVP law are not implemented. Finally, the Indian
government must address significant inefficiencies in the PVP registration procedures.
In 2014, the Indian Intellectual Property Office (IPO) issued Draft Guidelines for
Examination of Patent Applications in the Field of Pharmaceuticals, inviting comment from a
wide variety of stakeholders, including public hearings as well as written comments. We
commend the Indian government for its transparency and willingness to hear from interested
stakeholders. BIO submitted comments to the IPO on the draft guidelines and were pleased that
at least some of our comments seem to have found their way into the final version released. For
example, the IPO agreed to reconsider issues pertaining to para 4 (Markush claims), para 10.2
(Section 3(c)) & para 10.3 (illustrative examples for Section 3(c)), para 10.5-10.8 (Section 3(d)),
para 10.19 (Section 3(i)) among others. Furthermore, BIO raised the concerns in a public
meeting that the Guidelines showed a bias against pharmaceutical patents. The Controller-
General responded that the IPO would reconsider the Guidelines to ensure that they did not
prima facie demonstrate a negative bias toward pharmaceutical patents. However, the CG
categorically made it clear that the IPO would continue developing the Guidelines without
succumbing to the risk that they might be challenged before the court of law. Nonetheless, BIO
was pleased with the decision not to require patent applicants to list the INN name in patent
applications.
The Indian Intellectual Property Appellate Board (IPAB) has revoked several
pharmaceutical patents in post-grant opposition proceedings in the last few years including
patents protecting Sutent,28 Pegasys, Ganfort, Combigan, and Renadyl.29 In addition, IPAB
denied an application for a method patent protecting Glyphosate which increases climate
resilience in plants. Many of these patents were revoked on multiple grounds including
obviousness and inventive step even when these patents are valid on the same standards in other
patent offices around the world. If the Indian patent system is an outlier for granting patents, it
makes it very difficult for biotechnology companies to continue to invest in India.
BIO member companies have also found patents invalidated for Section 8 violations (a
requirement to provide information regarding corresponding foreign patent applications). The
IPAB’s recent judgments had put the obligation on the Patentee to provide the information to the
Indian Patent Office (IPO) and non-compliance leads to revocation. This information was easily
28 For Sutent, the IPAB remanded the case back to the Patent Office for a third review and reinstated the patent. However, Sutent is still at risk for losing patent protection. 29 IPAB revoked the process patent but upheld the product patent. However, the product patent is still being challenged in court.
37
accessible to the Examiner at the IPO and an unnecessary burden on the patent applicant. The
situation was only made worse by the disproportionate punishment attached to this section.
However, a recent Delhi High Court decision ruled that a Section 8 violation is no longer fatal to
a patent application and that Section 8 violations only require invalidation if the patent applicant
deliberately failed to provide the information.
There is an additional administrative burden for the patent applicant by the introduction
of the form 1 requirement with a recent IPAB decision requiring that ‘proof of right’ to file an
application should be established for all patent applications where the applicants are not the
inventors.
The lack of consistent adherence to patent rules and procedures between the regional
patent offices create problems. U.S. companies in India have reported filing in separate regional
patent offices and getting opposite results. Increased training on patentability criteria would help
alleviate some of the disparities that our companies face on a regular basis. The revised patent
examiner guidelines should assist in this matter. In addition, improved transparency would help
guide future prosecution. Expediting pending oppositions would also help alleviate the negative
effects on U.S. business in India. India needs a more robust infrastructure for searching and
procuring patents, including the ability to identify assignment records and other basic patent
filing information. In this regard, we recognize that the IPO issued a Request For Proposals to
design a new database for providing access to patent literature.30 Finally, coordination with other
international patent offices through work sharing programs will help standardize the patent
application process.
Another concern involves the delay in processing applications coupled with the
opposition procedures. The timelines and processes for opposition procedures are not well-
defined. Companies often wait dozens of years for a patent application to enter into the
examination process only to have the claims opposed in a pre-grant proceeding. The delay in the
process results in applications being held up indefinitely, resulting in the loss of the majority of
the effective patent term. Companies have also reported delays in the post-grant opposition
proceedings, one company reported waiting almost a year for a decision. Finally, the existence of
both a pre and post-grant opposition proceeding creates problems as a U.S. company will survive
a pre-grant opposition proceeding and have the patent granted only to face a post grant
proceeding from the same opponent.
The Indian generic industry routinely uses this opposition process to delay the grant of
U.S. biotechnology patents in order to produce their own legal copies of products that otherwise
should be enjoying meaningful patent protection in India as they do in other countries. Patent
term extensions to compensate for such losses do not exist in India, further exacerbating the
problem. Due to the broad nature of post-grant challenges, unlimited pre-grant opposition
should be abolished or severely curtailed to better reflect international practice. The ability of
third parties to submit references pre patent grant provides sufficient opportunity to weed out
applications that do not meet novelty and inventive step requirements; and should be the
preferred method of challenge pre-grant. All of these issues coupled with a lack of centrally
30 http://www.ipindia.nic.in/rfp/RFP_PatentLiterature_29December2014.pdf
38
located and electronically accessible records and requirements to have local agents to obtain
basic documentation make the whole process expensive and time consuming.
The Patent Office announced on December 24, 2009, that all patentees must submit Form
27, a yearly “statement of working” that proves that the patentee is exploiting its invention in
India. The Patent Office most recently reiterated this requirement in a Public Notice dated
January 13, 2015.31 If the company does not comply, the government may issue a compulsory
license. The regulation allows the patent office to cancel a patent if it has not been continuously
“worked” for a period of more than two years after falling under certain specified conditions.
This provision may result in the loss of intellectual property rights in India when a biotechnology
company cannot work on the drug due to extraneous conditions (such as a USFDA “clinical
hold”). Additionally, the biotechnology industry requires long-term development and investment,
which results in biotech products not commercializing in three years from the patent grant. U.S.
law recognizes this challenge by allowing patent term restoration to compensate for the loss of
patent life caused by product development and delays in regulatory approval.
A final issue involves the administrative burden of first filing in India for inventions
made by Indian residents. This process hampers efficient patent application filing, especially
when the patent applicant is a non-Indian entity that has joint inventions with Indian residents
and institutions. India should consider accepting first filling in the country where research or
product development is conducted for joint inventions or in the country where the patent
applicant is located.
Courts
India in late 2004 passed amendments to its Patent Law, recognizing patent protection for
pharmaceutical compounds. As a result, the courts in India had limited experience and case law
in dealing with patent enforcement issues and are still developing the standards for claim
interpretation, trial, and enforcement of injunctions, etc. Generally, the courts have no standards
for issuing injunctions and have not given deference to the determinations of the Indian Patent
Office. Historically, the courts have granted injunctions to protect U.S. company patents only in
limited circumstances. The courts also often decline to uphold patents that have been granted
with the same or similar claims in jurisdictions with higher patentability requirements. The
courts have also declined to consider granted patents when deciding whether to approve
marketing applications by generics if a patent is being tested in the courts or in opposition.
While there has been some improvement of companies being able to receive preliminary
injunctions in the courts, USTR should continue to monitor the situation to ensure this positive
trend continues.
In 2013, the Supreme Court of India denied an appeal for a patent revocation of a cancer
medicine, Glivec. The Court found that the medicine was anticipated by prior art and did not
satisfy the criteria under section 3(d) described previously. Glivec was a breakthrough cancer
therapy and is protected by patents around the world. This unique, and arguably TRIPS non-
31 http://www.ipindia.nic.in/iponew/publicNotice_21January2015.pdf
39
compliant feature of Indian law, results in creating vast disparities in outcomes that the law and
international trade agreements are designed to protect against.
Other recent case law developments have drawn concern from our member companies for
their seeming arbitrariness. A recent case involving Roche and Cipla resulted in the Court
deciding Cipla’s unauthorized generic copy did not infringe Roche’s patent but the court also
found that the patent was still valid. The court rendered a claim interpretation not in line with
international standards. The appeal is still pending since October 2012 and the hearing still has
not occurred. In March, 2013, Glenmark launched a generic version of Januvia/Janumet prior to
patent expiration and the innovator was not able to obtain a preliminary injunction. By January
2014, Glenmark earned Rs 16 crore ($2.6 million) on these medicines while the patent owner
was waiting for a final decision.32 Other judicial interpretations of the obviousness standard for
dosage forms and other similar inventions have also drawn concern.33 The second issue involves
the interpretation of the novelty and obviousness standards in the context of an enantiomer
product.34 The final issue is the rejection of any applications for new methods for known
compounds. 35
Biotechnology companies would find it helpful if the United States or other nations
experienced with patents were able to offer training to the Indian court system to help handle the
various issues involved in a patent case. Patent cases are often difficult and require specialized
training. Such training would be beneficial to the Indian court system to help them make
consistent decisions and create uniform standards for enforcement. Consolidating patent cases
into a few specialized patent courts might also help these issues as consolidation would allow
judges to gain expertise in a very new and complicated area of law. We note that this suggestion
was also made in the recent National IPR Policy drafted by the National IPR Think Tank created
by India’s Department of Industrial Policy & Promotion.
Enforcement
Failure to recognize or enforce patents gives generic companies an unfair global
competitive advantage. Those Indian generic companies, who are primarily export-oriented,
routinely ship generic medicines to countries where patent protection does not exist making it
difficult to bring innovations to these markets. Innovators also find it difficult to stop Indian
generic companies from exporting into countries with patent protection.
Indian generic finished products and API are advertised as being equivalent to the
innovator product. These products are sold in countries illegally without regulatory approval in
that country, often through internet pharmacies. Even with strong IPR, law enforcement is often
slow to take action unless the generic is proven to be counterfeit.
32 See http://articles.economictimes.indiatimes.com/2014-01-09/news/46030254_1_glenmark-pharmaceuticals-januvia-and-janumet-diabetes-drugs 33 including Aventis Pharmaceuticals, 1021/CHENP/2006 (2009), and Novartis AG, 728/CHENP/2006 (2009). 34 Astra Aktiebolag, 1255/DEL1995 (2009) 35 GlycoScience Labs 1752/CHE/2006 (2009)
40
Drug Regulatory Body
India’s drug regulatory agency approves generic company applications to market generic
drugs if a patent is being challenged. Accordingly, a generic company need only challenge a
patent to apply for marketing approval. This loophole creates an unfair advantage for Indian
generic companies.
India also has not yet implemented any meaningful protection for the data that must be
generated to prove that pharmaceutical and agricultural chemical products are safe and effective.
Under Article 39.3 of the TRIPS Agreement, protection must be extended against unfair
commercial use of such data by makers of generic copies of innovator products (i.e., products
that must be shown for the first time to be safe and effective, or to not cause significant risk to
the environment). BIO views the 2007 Reddy Report36 and its recognition that the present legal
provisions in India do not adequately meet the spirit of TRIPS Article 39.3 as a positive
development. Further, BIO views positively the suggestion in that report that India should adopt
a five-year fixed data protection term during which the relevant regulatory officials will not rely
upon data submitted by the originator when approving second and subsequent applications for
the same product. Nonetheless, it appears that meaningful protection for this data will not be
implemented in the near term. In addition, even the suggested post-transition period protection
suggested in the Reddy Report is subject to numerous, and apparently wide-ranging, proposed
“safeguards,” a number of which would appear to undermine the proposed protection almost
entirely. Effective market exclusivity for regulated pharmaceutical and agricultural chemical
products would contribute significantly to providing adequate and effective protection of
intellectual property rights in India for BIO’s members.
A clear biologic medicine regulatory approval pathway is still under development in
India. Nonetheless, the regulatory system has many shortcomings, such as the ability to seek
marketing authorization for biologics with as few as 100-patient clinical trials. Biosimilars of
Embrel, Rituxamab and Herceptin have been approved in India with accusations from Indian
industry that the regulatory agency is not following the biosimilar guidelines in place since
August 2012.37 A biologics pathway consistent with U.S. and European law is not only
necessary for U.S. companies and but also it will ensure that Indian manufacturers develop
products which are globally competitive as well as safe and effective for Indian patients. .
Finally, India should adopt a patent linkage system so that they are not inducing
companies to violate innovator patents.
Compulsory Licensing
The Indian Patents Act also unreasonably restricts the use of patent rights. The Act
provides broad exceptions for use of patented technology by the Indian Government or third
36 SATWANT REDDY AND GURDIAL SINGH SANDHU, REPORT ON STEPS TO BE TAKEN BY THE GOVERNMENT OF INDIA IN THE CONTEXT OF DATA ROTECTION PROVISIONS OF ARTICLE 39.3 OF THE TRIPS AGREEMENT (May 31, 2007). E.g., see safeguard (xi), which states that “[i]n cases where repeating the clinical trials for a drug is not considered essential, the Regulatory Authority may allow marketing approval to subsequent applicants of a drug similar to an earlier approved drug by placing reliance on the first applicant’s undisclosed data.” 37 See http://articles.economictimes.indiatimes.com/2013-05-14/news/39256077_1_cipla-drug-controller-biotech
41
parties. It also provides extensive authority for the grant of compulsory licenses, including
licenses justified only on the basis that the products falling under the patent are not manufactured
in India.
The Indian generic company Natco Pharma received a compulsory license on Bayer’s
Sorafenib which treats liver and kidney cancer. The Controller General found that the
compulsory license was justified on three grounds; “reasonable requirements of the public” are
not meet, the invention is not available to the public, and the invention is not “worked” in India.
The Controller interprets the working requirement to require manufacturing in India. While the
subsequent IPAB decision left it unclear whether local manufacture was required by finding that
Bayer had not “worked” invention on a commercial scale “even if ‘import’ alone would satisfy
the working condition”38, the Controller’s interpretation of the final ground is a clear violation of
TRIPS Article 27.1 requiring nondiscrimination based on “the place of invention, the field of
technology and whether products are imported or locally produced.” In July 2014, the Bombay
High Court denied Bayer’s appeal from the IPAB leaving this area of the law unclear for
innovators. Finally, the Supreme Court of India on December 12, 2014 dismissed a "Special Leave
Petition" filed by Bayer challenging the compulsory license. However, the court was very careful
in noting that all "questions of law remain open".
Early in 2013, the Indian Health Ministry called for the government to issue compulsory
licenses for three cancer drugs. In September of 2013, the Ministry limited the scope of their
initial request and filed a petition to compulsory license Sprycel.39 While this petition is pending,
the Indian Patent Office rejected BDR’s petition for a compulsory license on Sprycel for failing
to make a “prima facie” case holding the petitioner failed to adequately seek a voluntary license
from the patent holder. However, the patent is being litigated in the courts under an infringement
suit. In the meantime, we understand that the Department of Industrial Policy & Promotion
(DIPP) has, as of November 2014, denied the Health Ministry’s request for a compulsory license
for Sprycel. In providing access to medicines, other tools are more appropriate. Naturally, BIO’s
members are hesitant to bring new investment into countries which threaten to issue compulsory
licenses for their products.Finally, 95% of the World Health Organization’s Essential Medicines
List are not patented anywhere in the world.40 Yet, the World Health Organization states that the
drugs on the EDL are affordable to only 20% of India’s population.41 Meanwhile, India’s
negative IP environment is resulting in delayed launches of new drugs in India. A September
2014 study published in Health Affairs found that 50% of FDA approved drugs launched in India
with a lag of more than five years. The authors conclude that these drugs were sugject to weaker
patent protection in India which discouraged manufacturers from launching in India which
resulted in limited access. Yet, once those drugs were became available in India multiple
38 Bayer Corp. vs Union of India, OA/35/2012/PT/MUM (para 46) 39 In 2013, Roche dropped patent protection for Herceptin likely due to the deteriorating IP environment in India. The Health Ministry dropped Ixempra from compulsory license consideration around the same time. 40 See http://www.wto.org/english/tratop_e/trips_e/techsymp_feb11_e/laing_18.2.11_e.pdf and http://cameroninstitute.com/attachments/043_Pharmaceutical%20Access%20in%20Least%20Developed%20Countries.Fall2010.Draft-1.pdf 41 “Health workforce, infrastructure, essential medicines”, World Health Statistics 2009, The World Health Organization.
42
manufacturers produced and sold the same drug within one year of innovator launch.42 It also is
interesting to note that in Indian government spends only 1.19% of its GDP on healthcare. This
is well below the expenditure of other least developed and developing countries. For example,
Brazil’s government spends 4.23% of their GDP, China 2.73%, South Africa 3.9%, Botswana
6%, Angola 2.39%, Burkina Faso 3.4%, Congo 3.35%, Gambia 2.89%, and Cameroon 1.5% on
healthcare. BIO hopes the new government moves to rectify this situation.43
BIO recommends that USTR designate India to the Priority Watch List with an Out of
Cycle Review.
Indonesia
The protection of intellectual property rights in Indonesia continues to suffer from
considerable gaps that raise problems for BIO’s membership. BIO urges USTR to place
Indonesia on the Priority Watch List.
On September 3, 2012 Indonesia issued a decree authorizing government use of patents
for nine patented pharmaceutical products. This raises significant concerns about consistency
with Indonesia’s TRIPS obligations and other international norms. TRIPS Article 31 (a) requires
such licenses be considered on a case by case basis rather than a group. Article 31 (i) requires
the ability to appeal the compulsory license to a judicial or other independent body. No such
appeal seems to be present in this compulsory license. Finally the indiscriminate use of
compulsory licenses draws investment away from the biotechnology sector which is heavily
reliant on patents to generate investment funding. Indonesia’s actions on compulsory licenses is
inconsistent with their stated desire to create an enabling environment for innovation in the life
sciences.
Indonesia does not provide sufficient data protection. Article 39.3 of the TRIPS
Agreement requires that protection against “unfair commercial use” be provided for test data
generated to prove the safety and efficacy of pharmaceutical and agricultural chemical products.
Indonesia still does not have a law to fulfill its obligation under TRIPS Article 39.3. The
introduction of effective market exclusivity for regulated pharmaceutical and agricultural
chemical products would contribute significantly to providing adequate and effective protection
of intellectual property rights in Indonesia for BIO’s members. Indonesia’s patent law also has
considerable gaps that deny protection to a wide range of biotechnology inventions, including
transgenic plants and animals.
42 Berndt and Cockburn, The Hidden Cost of Low Prices: Limited Access to New Drugs in India, vol. 33 no. 9 (Sept 2014) 43 Data through 2011 accessed from the World Bank at http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS/countries. Specific percentages given are a combination of the Health Expenditure, total (% of GDP) which measures public and private spending and the Health Expenditure, public (% of total health expenditure) to calculate public spending as percentage of GDP.
43
BIO’s members also report problems with counterfeit medicines, despite recent steps
taken by Indonesia that include the establishment of a National Anti-counterfeiting Task Force.
The lack of expertise and resources in the courts and law enforcement agencies create problems
for BIO companies. Corruption is another challenge in Indonesia when trying to enforce a patent.
BIO requests that USTR further engage with Indonesia to put in a place a system that provides
adequate and effective protection for intellectual property rights.
Counterfeit biopharmaceuticals produced in Indonesia also pose a substantial safety risk
for patients. More international oversight is required to regulate the normal distribution channels
of counterfeits including internet pharmacies. Enhanced education in the medical sector could
help warn of the dangers of obtaining dangerous counterfeit medicines from unauthorized
suppliers. Finally, customs enforcement of counterfeit pharmaceuticals should be enhanced
worldwide.
Finally, there remains the unavailability of provisions that enable patent term extension in
appropriate circumstances. This has a detrimental effect on the value of biopharmaceutical
patents in Indonesia.
For these reasons, we request that Indonesia be placed on the Priority Watch List.
South Korea
BIO requests that USTR place South Korea on the Priority Watch List for new
deficiencies in their intellectual property system and failure to adequately implement their free
trade obligations.
South Korea’s data requirement for patent applications raises concerns similar to those
noted in respect to China. South Korea should modify its rules of practice to allow companies to
supplement the data contained in original patent applications during patent prosecution and post-
grant validity challenge proceedings, as is allowed in almost all other countries.
South Korean patent law requires that for a medicinal use invention, the original
specification (i.e., the international application in most cases) must contain quantitative
pharmacological data for at least one specific active ingredient, unless the pharmacological
mechanism was established prior to the filing date of the patent application.44 If such
pharmacological data is not included in the original specification, the application will be rejected
(or the granted patent subsequently invalidated). Moreover, South Korea does not permit the
44 This requirement has been strictly interpreted by the courts and the Korean Patent Office: Disclosing the IC50 range for a group of compounds without specifying which compound provides which value is not sufficient to satisfy the data requirement (see voluminous case law on this subject, including In re Allergan (Supreme Court Case 99 Hu 2143; November 27, 2001)).
44
applicant or patent owner to submit such data in response to an office action or post-issue
invalidation proceeding.45
If an invention is based on a finding of little or no side effects or toxicity, South Korean
patent law still requires that data supporting such effects be contained in the original
specification.
The extreme pharmacological data requirement in Korea creates unfair problems for
innovative biopharmaceutical companies because almost all other countries’ patent offices do not
require that amount of pharmacological data in the original application, or those offices allow
submission of such data during patent prosecution. Consequently, many biopharmaceutical
inventions that are patentable in other countries are unpatentable in South Korea for failure to
meet South Korea’s data requirement.
A particularly challenging aspect of South Korea’s data requirement is related to prior art
references. During the original patent prosecution or in post-issue invalidation proceedings, if a
prior art reference is cited against the application or patent in making an obviousness argument,
the applicant/patent owner is not allowed to submit any comparison data (or any other data)
between the invention that is the subject of the patent and the compounds in the prior art
reference in order to rebut the obviousness argument. This means that unless the patent applicant
provides comparison data in the original patent application to essentially every single reasonably
close prior art compound (which in many cases is a practical impossibility), it is unlikely that the
patent will issue in South Korea or, if the patent issues, survive a post-grant validity attack.
Finally, our members have reported problems that South Korea’s implementation of their
patent linkage obligations under their Free Trade Agreement with the United States. South
Korea’s interpretation of its obligations is quite narrow and leads to inequitable results.
Moreover, the MFDS may publish its own version of listed patent claims, rather than the actual
claims that the company submitted as part of the application process. The MFDS does not
provide applicants with a formal opportunity to comment on any changes to the listed claims
(although we understand they are informally notifying the company of any changes). During
appeals of these MFDS interpretations, extrinsic evidence is accepted only in limited cases. In
addition, the limited 12 month stay against a generic filer is far from automatic. MFDS can
decline to impose a stay even if patents are duly listed in the Green Book. These practices add
uncertainty to IP protections for both innovators and generic manufacturers and are inconsistent
with Korea’s obligations under the FTA.
In July 2014, the MFDS announced its revised, proposed draft legislation for the Korean
patent-regulatory approval linkage system. Notably, favorable changes regarding several issues
are contained in the proposal. In particular, the phrase “need to prevent significant damage” has
been deleted from the provisions regarding the stay mechanism, and it now appears the MFDS is
very likely to grant stays on the basis of the actual patent claims in view of the MFDS’s
45 Later addition of such data to the specification constitutes adding new matter and is not allowed [see, e.g., In re Pfizer (Supreme Court Case 2000 Hu 2965; November 30, 2001)]. However, if the original specification contains pharmacological data for at least one compound, it may then be possible to submit data for other compounds in response to an office action that states that the claims are not adequately supported by data.
45
position. Further, the stay mechanism appears to be more or less “automatic”; although a
patentee’s request still would be required, it appears a stay will be granted as long as certain
formalities such as the requisite time period or the filing of an enforcement action are met.
Overall, the revised draft provides the requirements and procedures for ensuring that market
approval of a generic drug would not necessarily facilitate patent infringement would provide a
first generic applicant’s exclusivity, and reporting of a settlement agreement between the holder
of the market approval for the brand drug or the patentee and the applicant for generic approval.
However, the revised proposal is not yet approved. In fact, there is an opposition bill that raises
significant concerns, which would exclude biopharmaceuticals from the scope of the propsed
mechanism and, moreover, includes provisions that may subject innovators to significant
damages in cases of good faith enforcement of patents where a patent is determined to be invalid.
Additionally, the Ministry of Health and Welfare (MOHW) has proposed amendments to the
National Health Insurance Act that include a provision enabling the Korean Government to
recover so-called “improper profits” resulting when an innovator prevents sales of follow-on
products through a court injunction (or an automatic stay of regulatory approval of a follow-on
version of the innovator‘s drug). The draft provision would punish patent owners for enforcing
legitimate patent rights in good faith and fails to clearly define the specific circumstances
regarding how these damages would be calculated or collected. This would lead to significant
uncertainty for innovators and would undermine confidence in the ability to meaningfully
enforce intellectual property rights in Korea in a way that is both troubling and contrary to well-
accepted international norms. Further, the proposed amendments contradict the purpose of the
patent enforcement mechanism, i.e., to provide a balanced and predictable approach for
resolution of patent disputes before launch of a follow-on product.
We urge the USG to engage their Korean counterparts to secure passage of an appropriate patent
enforcement mechanism consistent with KORUS provisions, and to work with MOHW to
reconsider the troubling amendments to the NHIA
Thailand
In light of continued policies relating to compulsory licensing of patents, and the lack of
any significant progress, BIO requests USTR to place Thailand on the Priority Watch List.
BIO recognizes the Thai government’s efforts to create task forces dealing with IPR and
appreciates this positive move. However, Thailand has undermined positive movement on IPR
with patent examination guidelines for pharmaceutical products that limit the patentability of
medical use claims and other secondary inventions similar to Argentina’s new guidelines.
The Thai Government’s continued support of compulsory licensing of patented
pharmaceutical products as part of its trade policy also contradicts positive efforts and indicates a
continued disregard for intellectual property rights that are critical for the development of new
medicines. In particular, BIO’s members are concerned that this policy denies adequate and
effective protection of intellectual property rights for innovative biotechnology products. BIO is
46
aware of efforts by the Thai government to develop a biotechnology sector, and appreciates its
outreach to the biotechnology industry. However, policies such as compulsory licensing will
only serve to drive biotech investment away from Thailand.
The Thai Government’s defense of compulsory licenses for drugs that treat
noncommunicable diseases (such as cancer, stroke, or myocardial infarction) is of particular
concern, given that many of BIO’s members’ research and development efforts target such
chronic diseases. These policies go well beyond the letter and spirit of the Doha Declaration,
which provides a mechanism for governments to deal with acute public health crises, and impact
the ability of biotechnology research and development efforts to recoup their massive
investments. The medical management of non-communicable diseases may be complex and
costly, but it does not rise to the level of a public health emergency. These extraordinary
measures should not be used systematically to facilitate budgetary planning.
BIO appreciates that diseases that can be treated with drugs affect a great many people
and are matters of national concern for many governments. At the same time, the decision to
maintain policies relying on compulsory licenses continues to undermine the adequate protection
of intellectual property that is important to BIO’s members, and consequently provides a
powerful disincentive for our members to do business in Thailand. BIO continues to believe that
the most effective global solutions will result from policies that respect and encourage
innovation.
Thailand also fails to provide meaningful protection for the pharmaceutical test data
required to prove safety and efficacy of new drug products. The implementing regulations for the
Trade Secrets Act provide a five-year term of protection for “maintenance of the trade secrets” of
pharmaceutical test data. However, the regulations do not appear to provide the data protection
against “unfair commercial use” in a manner consistent with Thailand’s obligations under Article
39.3 of the TRIPS Agreement. This protection is critical to biopharmaceutical companies and
their ability to successfully launch a product in a particular market.
Thailand also does not provide a formal system to prevent regulatory approval of generic
versions of pharmaceuticals that are still covered by a valid patent. The lack of such a “patent
linkage” mechanism facilitates patent infringement in the Thai market, leading to potential loss
of exclusivity for patented inventions in the biopharmaceuticals area and increased enforcement
costs. This is particularly harmful in the biotech sector as biotech drug development can cost a
billion dollars or more and can take more than a decade. Without assurance of recoupment of
investment, and in particular in these difficult economic times, biotechnology research and
development will diminish.
Finally, our members report a growth in availability of counterfeit pharmaceutical
products in the Thai market. This raises a number of significant concerns and constitutes not only
a risk to the valuable intellectual property rights of BIO’s members, but a serious health risk to
the Thai public.
We request USTR to place Thailand on the Priority Watch List.
47
Turkey
BIO remains concerned over Turkey’s IP and market access deficiencies. Turkey
requires significant progress in their intellectual property law as indicated by the European
Union in the Turkey 2010 Progress Report on Accession.46 BIO recommends that USTR place
Turkey on the Priority Watch List.
One of the most serious issues in Turkey involves the requirement for the Ministry of
Health to perform their own Good Manufacturing Practices (GMP) inspection at every
pharmaceutical production facility. This requirement must occur before product registration in
Turkey and has caused significant registration delays among our companies trying to enter the
Turkish market. The Ministry of Health does allow for GMP certificates from other competent
authorities but that acceptance is conditioned on other countries recognizing Turkish GMP
certification. However, this is difficult to accomplish as Turkey must join the Pharmaceutical
Inspection Convention and Cooperation Scheme that dictates international GMP standards and
Turkey will need to negotiate agreements directly with each participating country. Turkey’s
Ministry of Health neither has the staff nor resources to accomplish such a task and this directly
results in a non-tariff barrier to trade.
Orphan drugs has not been thoroughly addressed by Turkish legislation. Turkey’s
implementation of a comprehensive Orphan Drug Guideline is necessary to facilitate the
development and commercialization of drugs to treat rare diseases and maintain an attractive
market for foreign direct investment as well as R&D. BIO members are encouraged that the
Ministry of Health has been working on a new legislation, the Orphan Drug Guidelines, as early
as 2010. However, not only have these guidelines been stuck since 2010, but also in the latest
draft certain clauses regarding the prevalence of rare disease diverge widely from other standards
in place across the world. Indeed, the draft defines “a prevalence of not more than 1 in 10,000
persons in the population” contradicting the EU standard of “a prevalence of not more than 5 in
10,000 persons.” This divergence would exclude from the legislation many patients with a rare
disease, which would greatly undermine the interest of these guidelines. Expediting the adoption
and implementation of an EU-compliant Orphan Drugs Regulation with the EU definition of rare
diseases would be of crucial importance to ensure Turkish citizens have access to best medicines
and Turkey to emerge as a globally-competitive economy in medical innovation.
Additionally, Turkey lacks an effective mechanism for resolving patent issues before the
marketing of follow-on products such as generics. Providing effective mechanisms that gives the
innovator notice of infringement as is found in the United States and elsewhere would help
resolve patent issues before marketing approval and product launch.
A necessary step in European Union Accession involves Supplementary Protection
Certificates (SPC) that compensate for regulatory delay. Turkey should pursue compliance with
46 Turkey 2010 Progress Report on Accession, “Chapter 4.7: Intellectual Property Law.”
48
the European Union by providing up to five years of additional protection through SPCs for
patented products and six additional months for approved pediatric studies.
Data protection is undermined by regulatory delays in Turkey. Currently, regulatory
approval times exceed 850 days and will likely reach four years with new Good Manufacturing
Practice standards being implemented in Turkey. Turkey should either try to reduce regulatory
approval time to 210 days or commence the six year data protection period from the date of
regulatory approval rather than marketing approval in any EU country. Otherwise, the effective
amount of data protection an innovator receives may only be one to two years. Data protection
for combination products is also inadequate. Finally, the Regulation to Amend the Registration
Regulation of Medicinal Products for Human Use may affect data protection and would conflict
with EU standards by eliminating data protection for combination products.
Finally, price reimbursement remains a difficult issue for our members. The
reimbursement decision criteria are not clearly defined, the process is not transparent, and
involves a large amount of time to conclude the process (on average 345 days).47 Drastic budget
cuts directly targeting innovative medicines have occurred in the last few years during a period
of rapid economic growth in Turkey without transparency on government pharmaceutical
spending.
For these reasons, BIO recommends that USTR place Turkey on the Priority Watch
List.
Venezuela
BIO requests USTR to place Venezuela on the Priority Watch List.
As of 2006, Decision 486 of the Commission of the Andean Community is no longer in
force and Venezuela has re-adopted the Intellectual Property Law of 1955. Article 15(1) of this
law prohibits the patentability of pharmaceutical and chemical preparations. Interpretation by
the Registrar is still pending and a number of issues remain for the interpretation of this law.
However, patents previously granted have been revoked on technical grounds under this change.
Finally, we have been told that no patents have been granted in Venezuela in at least the last 6
years.
A second concern for biotechnology firms involves the requirement to publish the details
of the patent application in a newspaper. Some biotechnology firms are confused about the
purpose and additional fees necessary for this requirement. Another difficulty is that Venezuela
does not have patent linkage nor does it provide protection for pharmaceutical data.
47 AIFD Market Access Survey, March 2011
49
Finally, some biotechnology companies have indicated an interest in Venezuela joining
the Patent Cooperation Treaty (PCT) or other harmonization efforts. While the politics involved
in encouraging the Venezuelans to join may be complicated, Venezuela’s entrance into the PCT
or other programs would enable biotechnology firms to mitigate the high application translation
costs required in Venezuela. Additionally, if Venezuela were a PCT member a company could
designate Venezuela in their PCT filing and save the costs of filing a national application if the
compound is no longer suited for further development.
WATCH LIST
Australia
BIO’s members have recently faced unique IP challenges in Australia. BIO requests that
the U.S. Government monitor the situation and place Australia on the Watch List.
Australia’s government embarked on an unprecedented attack on innovative
biopharmaceutical companies in 2012 and 2013 that has put Australia out of step with the rest of
the developed world regarding its treatment of intellectual property rights. The government has
intervened in the suits and requested damages from the innovator for alleged losses the
government says it suffered by the delay in listing a generic’s drug in the country’s pharmacy
benefits scheme (“PBS”) when the innovator lost a patent infringement suit due to a court
finding of patent invalidity despite the fact that the company had won a preliminary injunction
earlier in the suit. The allegation made by the government was that the delay was caused by the
patent enforcement. In the first case where the government has intervened under this policy, the
government claims that the innovator owes more than $400 million in damages to the
government.
The Australian government is, in effect, disregarding the critical and long-held distinction
between patent abuse cases and bona fide patent enforcement cases, that is, between cases where:
(1) an innovative biopharmaceutical company acts without good faith or vexatiously or
unreasonably by seeking to abuse its patent rights to prevent the entry of a generic onto the
market, on the one hand (patent abuse cases), and (2) the innovative biopharmaceutical company
acts in a bona fide and reasonable manner in seeking to act to enforce its patent to prevent
infringement, but ultimately loses the case, on the other (bona fide patent cases).
This approach is inconsistent with the spirit and letter of Australia’s international
obligations relating to the protection of intellectual property rights. The Australian regime does
not meet its obligation by seeking to deter bona fide and reasonable patent enforcement by
innovative biopharmaceutical companies through the use of litigation to pursue government
compensation claims or via threats to do the same. This unprecedented policy threatens the
ability of innovative biopharmaceutical companies to utilize their legal right to enforce their
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patents. This approach is a major and inappropriate shift in policy and practice by the Australian
government.
The impact of the points above are illustrated by Australia’s suit against Sanofi and BMS.
In this case, Sanofi owned a patent covering a drug (Plavix) that it marketed in Australia itself
and under an arrangement with Bristol Myers Squibb (“BMS”). In 2007, Apotex, a generic drug
company, applied to register a generic version of Plavix on the Australian Register of
Therapeutic Goods (“ARTG”), intending to list the generic drug on the PBS and launch it on the
Australian market. Sanofi sought the usual form of preliminary injunction against Apotex to
prevent Apotex from infringing Sanofi’s patent. Sanofi was required to give the usual form of
undertaking to the court as to damages to compensate persons affected by the injunction.
At the time, Sanofi made its decision to seek injunctive relief, the government did not
notify anyone of any intent to seek compensation if Sanofi and BMS lost the lawsuit.
Sanofi had successfully enforced its patent in many jurisdictions around the world where
it had been challenged. Similarly, in 2008 the Australian trial court upheld the validity of the
key claims in the patent. That position prevailed until the appeals court reversed the trial judge
and invalidated the key claims in the patent in late 2009. Finally, the High Court (Australia’s
Supreme Court) declined Sanofi’s appeal in March 2010, ending the “merits” portion of the
lawsuit. One month later, the government listed Apotex’s drug on the PBS.
The government first notified Sanofi of its claim for compensation in February 2012 –
more than two years after the patent was invalidated, and almost five years after Sanofi and BMS
gave the undertaking as to damages that the government relied on as its basis for recovering
money. The government did not actually intervene until 2013.
When the government first notified Sanofi and BMS of its claim in February 2012, the
government stated that it had suffered money damages of AUD 65 million. Recently, the
government revised its damages claim to approximately AUD 450 million. The commercial
impact of such figures is obvious. The context in which a decision is made to seek an injunction
when faced with the risk of a $450 million claim if you lose the lawsuit – even though the
decision is bona fide and reasonable – is quite different from the decision-making process absent
knowledge of that risk.
Finally, the Australian government has issued reports which recommend the reduction of
IP rights and will likely lead to the deterioration of the innovative climate in Australia.
Suggestions include reducing patent term extensions, removing patent linkage, making
manufacturing for export a non-infringing act, and not increasing the term of data protection.
Colombia
The Colombian patent law raises a number of concerns for BIO’s members that warrant
further monitoring. In light of these concerns, BIO requests that Colombia be placed on the
Watch List with and Out of Cycle Review to monitor pending IP developments.
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The Colombian government recently passed a third comparitability pathway allowing
substandard biosimilars to enter the Colombian market. In addition to providing a biosimilar
pathway, the Colombian biologic regime allows biosimilar applicants to apply through a 3rd
pathway that requires far less information than is required under WHO, EMA, or US guidelines.
Several regulators, including the USFDA, warned the Colombian government that such an
approach would endanger patient safety. The Colombian government disregarded these views.
BIO supports policies that make biosimilars accessible to patients as many of our members
produce biosimilars. However, the 3rd pathway unnecessarily endangers patient safety and runs
counter to internationally accepted norms for biosimilars pathways.
Andean Community Decision 486, which applies in Colombia, denies patents to
inventions of “biological material, as existing in nature, or able to be separated, including the
genome or germplasm of any living thing.” This exception categorically excludes a wide array of
biotechnological inventions from the patent system in Colombia. This exception is inconsistent
with obligations of Colombia under the TRIPS Article 27.1 requires that patents to be made
available to “any inventions … provided they are new, involve an inventive step, and are capable
of industrial application.” The Andean Decision also excludes the patenting of use claims. In
addition, BIO’s members are systematically being denied protection in Colombia for inventions
in chemical polymorphs and isolates that are routinely patented in other jurisdictions. This
practice also appears to be inconsistent with the requirements of Article 27.1.
BIO also notes with concern significant delays in Colombia in the processing of patent
applications for commercially valuable biopharmaceutical inventions, essentially denying
protection for these inventions. Such concerns could be exacerbated by legislative proposals that
seek to implement a secondary patent review for medicines by the drug regulatory agency.
Andean Decision 486 also requires that patent applications include requirements relating
to the acquisition or use of genetic resources if the relevant inventions “were obtained or
developed from” genetic resources. As noted above, these types of requirements cause great
uncertainty over potentially valuable patent rights that result in significant risks for BIO’s
members. These requirements may result in the outright denial of patent protection for valuable
inventions. In addition, such requirements appear to be inconsistent with Colombia’s obligations
under the TRIPS Agreement.
Regulatory issues related to patents also arise in Colombia. To comply with the US-
Colombia Free Trade Agreement, Colombia issued a decree for “transparency” making public
processes for sanitary registration. While this is an improvement, the lack of effective linkage
between the Patent Office and Regulatory Agency still creates problems.
Finally, our members report that it is difficult to enforce a patent in Colombia. A general
lack of technical knowledge on IP matters compounds a perceived lack of independence of the
judicial branch on IP sensitive decisions. These actions warrant further monitoring.
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Egypt
BIO requests that USTR place Egypt on the Watch List due to continued concerns for
U.S. biotechnology companies.
The Egyptian patent law prohibits patent protection for many valuable biotechnology
innovations. Inventions in the subject matter areas of organs, tissues, viable cells, natural
biologic substances, and genome are expressly excluded from patentability. These are areas of
subject matter that must be extended protection according to the obligations contained in the
TRIPS Agreement, provided the material in question is new, involves an inventive step and is
industrially applicable. While TRIPS Article 27.3 does recognize some permissible areas of
exclusion from patentability, these provisions of the Egyptian patent law do not fall within the
permissible exclusions. In addition, Egypt precludes the patenting of genetically-engineered
plants and animals. In sum, the Egyptian law precludes patenting of a wide range of basic
commercial products and processes in the biotechnology industry.
Egypt also does not provide patent linkage and has slow new medicines approvals in an
unreformed, opaque system.
Due to these and other market access concerns, BIO requests that USTR continue to
engage its Egyptian counterparts to make improvements to patent protection in Egypt and to
provide for the eventual adoption of a fully TRIPS-compliant regime in that country.
European Union
BIO Member face several challenges in the European Union and, in particular, with
respect to policies of the European Medicines Agency (EMA) relating to the potential disclosure
of clinical trial data and other confidential commercial information submitted to the EMA for the
purposes of obtaining marketing approval for pharmaceutical products. As a result, BIO urges
the United States to place the European Union on the Watch List.
After a lengthy consultation process, the EMA adopted a final “policy on publication of
clinical data for medicinal products for human use” in October 2014. While this policy appears
to make significant improvements when compared to the draft policy from June 2013, BIO
remains concerned that the EMA policy implementation may harm patient privacy, the integrity
of the regulatory system, and incentives for pharmaceutical research and development. If
implemented in a manner that does not adequately protect confidential commercial information
from disclosure, moreover, these practices would not be consistent with the international
obligations of the European Union to protect such information under the TRIPS Agreement.
The Clinical Trials Regulation adopted by European Parliament in 2014 is also of
concern as it states that, in general, clinical study reports do not contain commercially
confidential information (recital 20a). While the regulation could provide a degree of protection
53
for such information (see Art. 78), we are concerned that the publication of clinical study reports
30 days after authorization and without adequate protection mechanisms could undermine the
competitiveness of the biopharmaceutical sector and create a precedent for other sectors
regarding the disclosure of commercially sensitive information.
BIO is highly concerned that such an approach could undermine patient privacy by
increasing the risk of re-identification of individual patients even if steps are taken to anonymize
patient level data; will undermine patient trust in the safety and effectiveness of approved
medicines by encouraging “second-guessing” of EMA’s regulatory determinations; and will
undermine incentives for innovation by making confidential commercial information available to
competitors in the market. Moreover, once disclosed in Europe, such data may be subject to use
by competitors seeking in approvals for follow-on products in other markets, thereby
undermining or eliminating the ability to obtain appropriate data protection periods in other
markets.
For future products approved in the European Union, USTR should monitor the
implementation of the Clinical Trails Regulation by the EMA. In particular, the EMA’s online
portal for clinical study reports still creates challenges for BIO’s members. While the “terms of
use” section does require certain protections for how the information might be used, all a user
needs is an unverified email address. EMA will not confirm registrants of the system are who
they say they are and the EMA will not enforce the “terms of use.” EMA also cannot bind
regulatory agencies in third countries from accepting competitors’ clinical dossiers based on the
innovators intellectual property. In addition, the EMA is still defining what information may be
redacted by innovators in the clinical study reports.
Likewise, BIO’s agricultural membership face similar disclosure concerns. Recently,
European regulatory bodies such as the European Food Safety Authority (EFSA) and various
member states have received a significant increase in document access requests and associated
litigation. In October 2013, the EU General Court issued Decision T-545/11 which expanded the
definition of data relating to “emissions into the environment” to data that is only connected “in a
sufficiently direct manner to emissions into the environment.” This change greatly increased the
data subject to irrefutable public disclosure in spite of significant damage to protection of
commercial confidential data, intellectual property or other rights.48 The case is currently on
appeal by the European Commission to the European Court of Justice with a decision likely in
2015.
Our members also lack an effective means to resolve patent disputes prior to market
launch of a follow-on biologic. While generic producers are able to challenge innovator patents,
the laws of the European Union and its Member States do not provide an equivalent mechanism
for innovators prior to market launch. Innovators must then sue after market launch which may
not adequately compensate for the loss of market share that occurred while the infringing product
was on the market.
48 The data disclosed included: (i) the impurity profile (ii) the analytical profile of test batches including the minimum, median and maximum impurity content; and (iii) the composition of plant protection products, including quantities of active substance and surfactant.
54
In October 2014 the new EU regulation EC No 511/2014 entered into force implementing
the Nagoya protocol in the EU. The implications for companies will need to be monitored.
Finally, members have noted a concern with referrals to the enlarged board of appeal of
the European patent office with regard to essentially biological processes. Specifically, there is
the G1/08 decision on essentially biological processes which has created some uncertainty about
the patentability of certain technical processes. In addition, there is a pending referral G2/13 in
which the patentability of claims to products obtained through essentially biological processes is
at stake.
As a result, BIO recommends that USTR place the European Union on the Watch List.
Mexico
BIO recommends that Mexico be placed on the Watch List due to continued difficulty in
protecting and enforcing intellectual property rights.
Mexico continues to inadequately implement its obligations relating to test data required
by regulatory agencies to obtain marketing approval for pharmaceuticals. Mexico has obligations
under TRIPS Article 39.3 to provide protection for pharmaceutical test data against “unfair
commercial use,” and under the North American Free Trade Agreement (NAFTA) Article 1711
section 6 to provide a five-year protection period against reliance by subsequent applicants on
the data supplied by the originator. Nevertheless, Mexico still does not provide protection
consistent with these obligations. The Industrial Property Law states that Mexican law will
implement requirements under its various international obligations. However, we are not aware
of any implementing regulations or practices that provide for a five-year term of non-reliance
consistent with Mexico’s international obligations.
Officials in the Mexican government have stated that they do not intend to extend data
protection to biological medicines. Such actions are contrary to Mexico’s obligations under
NAFTA and TRIPS. Further, the U.S. Government should take such statements seriously during
the upcoming Trans Pacific Partnership negotiations and ensure Mexico will meet their existing
obligations before extending additional trade preferences to Mexico in the TPP agreement..
BIO is also concerned about the lack of adequate enforcement procedures in Mexico that
undermine the ability to enforce patents on biopharmaceutical products. We also remain
concerned about the apparent proliferation of counterfeit medicines in Mexico and the
consequent economic and public health risks.
In addition, extensive periods of time pass before patent infringement cases are decided.
Companies report that IP enforcement cases proceed in two stages before the Mexican Patent
Office which can last 4-5 years. Two additional appeal stages then follow before a final decision
55
is made in the case. This problem is particularly acute as the possibility to recover damages is
delayed until after all appeals are exhausted.
Even then, innovators are not allowed to receive damages in court and must initiate a
second proceeding before a civil court to receive a damage award. While some may argue that
injunctions prevent this problem, the infringer can post bond without providing evidence of
noninfringement and have the injunction lifted and allow the infringing products to remain on the
market. This causes extensive delay which can last up to 10-12 years between initiation of
proceedings and recovery of damages. This process is extremely costly and inequitable to the
innovator.
A final wrinkle involves IMPI using independent technical analysis regardless of expert
witness opinions submitted by the parties. This practice creates further obscurity in the resulting
decisions.
Linkage between the regulatory agency and the patent office only covers patents covering
a pharmaceutical active ingredient per se and patents covering formulations. Patents covering
formulations or uses are not included. Several court decisions have ordered the publication of
formulation and use patents to satisfy linkage requirements but the patent office refuses to
publish these patents without litigation and the regulatory agency has shown reluctance to
observe these patents. Also, some patents are not included if not requested for inclusion into the
gazette immediately following the grant of the patent. The linkage system also does not allow
for a full review of whether a generic drug would infringe patent rights.
Market access for orphan drugs is also a challenge for our companies in Mexico.
Consejo de Salubridad General’s (CSG) health technology assessment process has changed
multiple times in the past few years. The agency will release new guidance without opportunity
for public comment and new submission guidance will be effective immediately. Manufacturers
of drugs currently under review have had to re-submit different applications multiple times to
adhere to the new process. Additionally, the CSG’s reasons for denying applications are
inconsistent from one submission to the next.
Finally, Mexico has numerous biosimilars on the market (known as “biolimbos”) which
have not undergone any marketing authorization review consistent with globally accepted
standards for the approval of biosimilars. The Mexican government is currently reviewing its
biologic regulatory regime but recent additions and updates are not specific on how new
regulatory standards would apply to biolimbos currently on the market.
Mexico is a member of the OECD. The data protection regime and enforcement of
intellectual property rights fall far short of standards widely implemented in OECD countries. In
light of these concerns, BIO requests that USTR continue to monitor events and that Mexico be
placed on the Watch List.
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Paraguay
Paraguay continues to have great deficiencies with respect to its patent system and the
protection of data supplied to regulatory agencies in support of product marketing authorizations.
BIO requests that USTR to place Paraguay on the Watch List and monitor the country under
Section 306.
Paraguay’s patent examination system suffers from a backlog that delays the grant of
patent protection for valuable inventions and thereby denies the adequate and effective protection
of intellectual property rights for BIO’s members. We understand that the National Direction of
Intellectual Property (DINAPI) has taken steps to reduce this backlog through the collaboration
agreement between DINAPI and the Brazilian National Industrial Property Institute (INPI) that
conducts the prior art search for the Paraguayan patent applications. The DINAPI performs
substantive examinations in a chronological order according to the date of filing of the
application. The lack of qualified human and technical resources within DINAPI constitutes a
great obstacle to reduce the backlog that has already accumulated. Further, Paraguay remains
outside of the Patent Cooperation Treaty (PCT), which facilitates the filing and examination of
patent applications in 142 member countries. Acceding to this widely accepted agreement would
be a positive step toward facilitating the procurement of patent protection in Paraguay for BIO’s
members.
BIO has heard reports that Paraguay has a double patent review system where their drug
regulatory authority conducts a secondary patentability review. Duplicative patent reviews
discriminates against the biotech industry and likely violates Paraguay’s treaty obligations.
Paraguay’s patent laws also do not provide for sufficient patent term extensions to fully
compensate for unwarranted delays in the patent application process. Thus, inventors seeking
patents remain exposed to a substantial loss of rights (term) due to delays in the examination, and
cannot enforce a patent application in cases of an infringement while the patent application is
still under the patent prosecution process. The patent law in Paraguay also excludes transgenic
plants and animals from patent protection, thereby further limiting the availability of meaningful
protection for many valuable biotechnology innovations.
Paraguay does not provide adequate protection for the data that must be generated in
support of marketing authorization to prove that agricultural chemical products are safe and
effective. Law No. 3519/2008 of Testing Data Protection distorts the general principles set forth
by Article 39.3 of TRIPS since it only provides protection to new chemical entities with no prior
registration in Paraguay or in any country in the world. This requirement is impossible to achieve
since registrations of new products are obtained first in the country of origin and then are
extended to other jurisdictions. In addition, Law No. 3519/2008 allows regulatory agencies to
use data (which constitutes proprietary information for an applicant) in support of any other
agricultural chemical product application, filed by third parties, by similarity and allows the
disclosure and use of confidential information after a period of time (5 years). We believe it is
necessary to amend Law No. 3519/2008 in order to grant real protection to all confidential and
secret information which has a significant commercial value including testing data provided to
regulatory agencies for product marketing authorizations. This protection is critical to the ability
57
of biotechnology companies to develop and commercialize such pharmaceutical and chemical
products in a particular market. It is moreover an obligation of Paraguay under Article 39.3 of
the TRIPS Agreement, which requires such data to be protected against both disclosure and
“unfair commercial use.”
Persistent deficiencies in the patent and data protection regime in Paraguay raise issues in
respect of Paraguay’s bilateral and international obligations and deny adequate and effective
protection for the intellectual property rights of BIO’s members.
Peru
Peru has ongoing intellectual property challenges without significant progress and BIO
requests USTR to place Peru on the Watch List.
Biotechnology companies are concerned that the use of a drug in a method of treatment
remains unpatentable in any claim format. Other countries where method of treating humans is
not patentable allow patents to cover the use of the drug for treatment which protects the
commercial sales of the drug and not the treatment method per se. Nevertheless, even though
Peru did provide this protection in the past, current patent law does not allow the patent office to
grant patents on new uses either. Restoring the patent protection to cover new uses of drugs
would allow biotechnology companies to protect their substantial investment to approve and
market drugs in a particular country while preventing counterfeits. The patent system also
suffers greatly from excessive delays in examination of patents.
While Peru has implemented a data protection regime for small molecules, the
government has taken the position that biologics are not included under this regime. This is an
incorrect interpretation of Peru’s obligations under TRIPS and the US-Peru Trade Promotion
Agreement (USPTPA). BIO members urge USTR to continue to monitor Peru’s implementation
and enforcement of data protection. Finally, there is no linkage between the Patent Office and
the Regulatory Agency in approving generic drug sanitary applications. The legal obligation
provided in implementation of the USPTPA to publish any marketing approval application
within 48 hours of filing is permanently infringed. Additionally, enforcement of patent rights in
Peru is difficult due to a lack of technical expertise on IP and a perceived lack of independence
of the judicial branch on IP sensitive decisions.
With regards to market access barriers, although a revised Pharmaceutical Products Law
was enacted five years ago to improve the regulatory process for seeking marketing approval of
biopharmaceuticals in Peru, the MoH has repeatedly delayed issuing regulations to implement
this Law. When implemented, the new regulations are expected to significantly improve the
currently subpar safety and efficacy standards in Peru. Current draft guidelines include a
transition mechanism that would further delay implementation of the Pharmaceutical Products
Law for four more years.
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Philippines
In 2008, the Philippine government enacted the Republic Act 9502 (R.A. 9502), also
known as the “Universally Accessible Cheaper and Quality Medicines Act of 2008.” This
legislation amended the Intellectual Property Code of the Philippines. The amendments
weakened the protection of biopharmaceutical inventions in the Philippines. As a result, BIO’s
members are denied adequate and effective intellectual property protection. BIO requests USTR
to place the Philippines on the Watch List.
The amendments introduced a provision into Philippine law that denies patent protection
for a new form of a known substance which does not result in “enhancement of the known
efficacy, safety and purity of that substance.” The amendments appear to exclude from
patentability many significant inventions in the biopharmaceuticals area. For example, a new
form of a known substance with improved heat stability for tropical climates, or having other
benefits that may not result in “enhanced efficacy” per se, would be denied patent protection
even if it met all other patentability criteria. This additional patentability requirement appears to
be inconsistent with the obligations of the Philippines under Article 27.1 of the TRIPS
Agreement, which provides that patents be made available to “any inventions … in all fields of
technology, provided that they are new, involve an inventive step and are capable of industrial
application.”
Moreover, this additional requirement applies only to drugs or medicines, and therefore
creates a higher standard of patentability for this category of invention. This is inconsistent with
the non-discrimination requirement of Article 27.1 of the TRIPS Agreement that “patents shall
be available and patent rights enjoyable without discrimination as to the … field of technology.”
R.A. 9502 also contains provisions that expand the grounds on which compulsory licenses may
be granted. This includes a new ground that permits a compulsory license “where the demand for
the patented drugs and medicines is not being met to an adequate extent and on reasonable terms,
as determined by the Department of Health.” This provision, which apparently can be invoked at
the discretion of a government agency, has the potential to undermine adequate and effective
protection of patent rights for biopharmaceuticals and is not consistent with the non-
discrimination clause of TRIPS Article 27.1.
The Philippines also does not provide a formal system to prevent regulatory approval of
generic versions of pharmaceuticals that are still covered by a valid patent. The lack of such a
“patent linkage” mechanism facilitates patent infringement, leading to potential loss of
exclusivity for patented inventions in the biopharmaceuticals area and increased litigation costs.
R.A. 9502 also expands permissible grounds for parallel importation of patent-protected
products only with regard to “drugs and medicines.” This provision violates the
nondiscrimination clause of TRIPS Article 27.1. In addition, the provision permits importation of
patented drugs and medicines from a country where the product was placed on the market by
“any party authorized to use the invention.” This appears to permit importation of goods even
where they are placed on the foreign market without authorization of the patent owner, e.g.,
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where the “authorized party” in the foreign market was operating under a compulsory license.
Thus, the amendment effectively gives extraterritorial effect to a foreign compulsory license,
even where the rationale for the compulsory license was based on factors related solely to the
national market in the jurisdiction that imposed the license. This is highly inequitable and
appears to be inconsistent with recognized standards of “international exhaustion” of patented
inventions.
In addition, the Philippines does not provide meaningful protection for pharmaceutical
test data required to prove safety and efficacy of new drug products. The implementing
regulations of R. A. 9502 purport to provide protection against “unfair commercial use.”
However, the same regulations clarify that “[t]he [Bureau of Food and Drugs] shall not be
precluded from using all data, including, but not limited to, pre-clinical and clinical trials, of an
applicant when evaluating other applications.” This appears to expressly permit “unfair
commercial use” by generic competitors of the pharmaceutical test data generated by innovators
to support marketing approval applications without any data exclusivity period to protect these
data.
BIO requests that USTR work with the Philippines to provide for an intellectual property
regime that provides adequate and effective protection of intellectual property rights for U.S.
rights holders in that country. In light of this weakening of patent protection for biotechnological
inventions, BIO requests that USTR place the Philippines on the Watch List.
Russia
BIO’s have expressed certain challenges in operating in Russia. Russian improved their
patent laws in 2008, thereby bringing patent practice closer to Western patent systems. In
addition, Russia is, coordinating between their regulatory agency and patent office, creating a
new IP Court and is a new WTO member. Problems remain for our member companies in
Russia and BIO requests that USTR place Russia on the Watch List.
Russian law fails to recognize requests for generic marketing authorization as an act of
infringement. In other words, an innovator cannot sue for patent infringement upon first learning
of a request for generic marketing approval, rather the patent-holder must wait until the generic
drug is approved. Russian courts compound this problem by not typically granting preliminary
injunctions or even permanent injunctions at the end of successful litigation.
Innovators operating in this difficult environment also find challenges with the latest
revision of FL 61 which significantly lowers regulatory data protection. The amendments to the
law allow applying for a registration for generic drug four years following marketing
authorization for original small molecule drugs and three years for an original biologic medicine
(4+2 and 3+3). Without adequate enforcement mechanisms, the generic can be placed on the
market prior to the expiration of the six-year data protection period. In addition, FL 61 contains
no specific provisions on the protection of pre-clinical or clinical trial data to be used for generic
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registration prior to the expiration of the RDP period, industry is concerned that the amendments
to FL 61 will further weaken RDP in Russia.
The revised law’s novelty requirement for chemical, medical, or other compositions
present a challenge for biotechnology companies. The new novelty regulation excludes from
patentability those claims that involve the use of the known composition. In other words, use
claims are not patentable if the compound is already known. It remains unclear if method of
treatment claims remain acceptable under the new regulations but practically the Russian Patent
Office requires extensive data (usually only in vivo data) to prove the viability of the treatment.
Refusing to patent this secondary patenting creates a disincentive for companies to invest in
research on their existing products to help unique patient populations, create new treatment
pathways, or use the product for new disease indications.
Access to the Russian market for orphan drugs is also impacted by unclear and changing
regulatory standards. Since 2013, the Russian Ministry of Health (MOH) has been amending the
rules for the inclusion of drugs into the Vital and Essential Drugs List (EDL) delaying the update
of this list and inclusion of new drugs. The regulation went through several drafts with changes
to the submission template, assessment timelines and criteria, and the information requirements
until it was finalized in May 2014.
One member claims that in a court case a Markush claim has not been held infringed
because the claim does not specifically state the chemical structure of the infringing product.
However, the specific claim reading on the infringing product had not been held infringed
because claim 1 which is the Markush claim had not been held infringed. In a similar case, the
same judge held a Markush claim infringed because the infringing company had been a Chinese
and not Russian generic company.
More recently, senior Russian government officials have indicated a desire to more
systematically use compulsory licensing. This raises serious concerns about the ability of
innovators to meaningfully enforce patents in Russia. We urge the USG to monitor this situation
closely and to encourage their Russian counterparts to avoid misuse of this tool, which is
permitted only in certain circumstances where particular conditions must be met and in
extraordinary circumstances as a last resort.
Vietnam
Vietnam has implemented new examination guidelines similar to those in Argentina.
Discriminating against pharmaceutical inventions in this manner is a violation of TRIPS Article
27.1 which requires that “patent rights to be enjoyable without discrimination as to the place of
invention, the field of technology and whether products are imported or locally produced.” For
these reasons, we urge the United States Trade Representative to maintain Vietnam on the
Watch List.
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Conclusion
BIO appreciates the opportunity to comment on the intellectual property rights issues
affecting U.S. biotechnology companies abroad. We hope that our submission helps the efforts of
the U.S. Government in monitoring IPR internationally.
Sincerely,
Joseph Damond
Senior Vice President
International Affairs
Biotechnology Industry Organization